Apple is set to report Q2 earnings on Thursday amid tariff and supply chain challenges.
Tariffs will be a hot topic for investors as China, the main iPhone producer, faces a 145% levy.
Investors haven’t forgotten about Apple Intelligence either, analyst Dipanjan Chatterjee says.
The past three months have been a whirlwind for Apple, and they’re expected to address the chaos on Thursday.
The tech giant will report its fiscal 2025 second-quarter earnings to investors later this week. It’s been a quarter marked by flip-flopping tariff announcements from President Donald Trump, supply chain challenges, and questions about iPhone pricing as a result.
Thursday afternoon will be Apple’s moment to speak for itself on the fate of its products and manufacturing. Tariffs, of course, will be the vocabulary word for this earnings season, and the company is facing steep rates if things continue how they are.
Jacob Bourne, analyst at BI sister company EMARKETER, said there are three key tariff-related issues for this earnings call: “Apple’s ability to absorb, avoid, or pass on potential price increases, the financial impact of tariffs, and the timeline for effective supply chain diversification.”
With Trump’s most recent 145% tariff on goods imported from China, the main hub for Apple manufacturing, the iPhone maker is reportedly exploring the next best place to make its products.
Although India has a proposed rate of 26% once the 90-day pause on additional tariffs is lifted — and if the US and India don’t negotiate a trade deal — it’s a better deal than importing goods from China.
On April 11, it looked like Apple may have gotten a break when the US Customs and Border Protection announced an exemption for smartphones, laptops, and other tech devices that left warehouses on or after April 5. They would still be subject to the fentanyl-related 20% tariffs on Chinese goods that were levied in February.
Two days later, however, Trump made it clear that “nobody is getting off the hook” for tariffs in a post to Truth Social, though it’s unclear what those tariffs could look like.
“The reported plan to shift all US iPhone assembly to India by 2026 signals that Apple is taking tariff threats seriously, but this transition faces significant logistical hurdles,” Bourne said.
Research from financial services firm Morningstar suggests that India is responsible for 20% of global iPhone production while China makes up more than half, William Kerwin, senior tech analyst at the firm, told BI.
The question of how tariffs will impact consumers remains unanswered ahead of Thursday’s call. As for the short-term, some users have said they’re upgrading as soon as possible to avoid paying $2,000 or more on a new iPhone.
Looking ahead, investors will want to know how much of the tariff-related costs will need to be passed on to consumers, said Dipanjan Chatterjee, vice president and principal analyst at Forrester.
The fourth question that Apple will likely need to answer for investors isn’t tariff-related, but rather around the progress of Apple Intelligence going into Q2.
“The tariff brouhaha may have distracted many Apple watchers from the AI conversation, but this intrinsic factor remains vital to Apple’s success,” Chatterjee said.
Its big AI rollout has been stunted by delays and low demand despite being hailed as a new era for Apple. Bullish analysts expected the software to drive demand and take iPhone sales to new heights, but it hasn’t happened.
Chatterjee said investors will, once again, ask when “the promise of an Apple Intelligence-powered upgrade super cycle come to fruition.”
Apple is known for keeping things short on earnings calls when it comes to stickier subjects. During the last call, Apple CEO Tim Cook said it was “monitoring the situation” when asked about tariffs in January, and he left it that.
“I don’t expect much transparency from Tim Cook or the team,” Kerwin said.
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