The past few months have not been kind to most tech stocks. The tech-heavy Nasdaq Composite is down 8% year to date as investors worry that President Trump’s tariffs will impede technology companies’ growth.
Apple (NASDAQ: AAPL) has not been immune to the volatility with the stock tumbling 22% this year. More importantly, the company is expecting challenges ahead despite solid results from its most recent quarter. Here’s where Apple could be one year from now.
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Image source: Apple.
The good and bad of Apple’s second quarter
Investors were wondering how tariffs would play into Apple’s latest results and outlook, but they didn’t have much of an impact on the fiscal 2025 second quarter (ended Mar. 29). CEO Tim Cook said on the earnings call, “For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory.”
Cook noted that Apple is now sourcing many of the iPhones slated for sale in the U.S. from India, and most of its other products headed for the U.S. are now coming from Vietnam. Apple reshuffled its production after President Trump slapped a cumulative 145% tariff on many imports from China.
Beyond that challenge, Apple reported some positive results. Sales climbed 5% year over year to $95.4 billion, beating Wall Street’s consensus estimate of $94.6 billion. The tech giant’s earnings of $1.65 per share also outpaced the average analyst estimate of $1.63 per share. Meanwhile, the company’s important services segment grew nearly 12% to $26.6 billion, though that fell short of the analyst consensus estimate of 14% growth.
Despite the company’s solid sales and earnings growth in the quarter, there are still dark clouds on the horizon for Apple stemming from the new tariffs.
Where will Apple be over the next year?
Tariffs have made it especially difficult for companies and investors to know where a company is headed, especially in the near term. Many management teams have pulled their guidance for the year, and some have even issued two sets of guidance based on whether or not the tariffs stay in place.
Apple is struggling to forecast its results as well with Cook saying on the call, “I don’t want to predict the future because I’m not sure what will happen with the tariffs […] it’s very difficult to predict beyond June.”
But he did shed some light on how tariffs will dent the company in the current quarter: They will add $900 million to Apple’s costs. And that’s likely just the beginning.
Cook said investors shouldn’t take the $900 million estimate from the current quarter and use it to make projections for future quarters “as there are certain unique factors that benefit the June quarter.”
In short, things could get worse
To make matters worse, tariffs are likely to change. The broad 10% tariff on imported goods from nearly all countries remains, while higher reciprocal tariffs are on pause. Meanwhile, China faces 145% tariffs on most of its exports to the U.S., but the administration says it’s talking with China to lower the temperature on the trade war. Even more confusing is that President Trump has walked back some tariffs for specific industries and sectors.
All this adds up to a situation where companies like Apple are trying to navigate a complicated regulatory environment where the rules are less than clear.
Another indicator that the next year could be less than stellar for Apple is the fact the company cut its stock buyback authorization for the year by $10 billion, down to $100 billion total. Companies sometimes reduce their repurchase programs when they’re uncertain about the future.
The volatile nature of this administration’s trade policies means that having a near- to medium-term outlook for many companies is nearly impossible. Tariffs could eventually force Apple to raise prices on its products or absorb some of the costs and weigh down its earnings. To what degree this happens is still unknown, but Apple investors should brace for difficult times ahead if U.S. trade negotiations fall apart.
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Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
