Despite Apple’s favorable fiscal Q225 results, beating The Street on the top and bottom lines, and good Q325 guidance, AAPL shares fell after earnings, largely due to a lack of visibility into the second half of the year.
Gene Munster for Deepwater Asset Management:
Of the 20 analyst questions on the call, six were related to the post-June outlook, with Cook and CFO Kevan Parekh offering limited clarity and using unusually cautious language, calling it “very difficult to predict.” Much of this uncertainty stems from the unresolved Section 232 tariff investigation, which could further affect cost structures and supply chain decisions.
My take is that investors are asking for a lot. It’s rare that Apple ever talks about the business beyond the current quarter, so there’s precedent for them sidestepping long-term questions. What gave the “cautious on the back half of the year” camp some momentum was the frequency of questions on the topic. In the end, I believe Cook feels we’re in a difficult period, and giving a six-month outlook would be reckless. I also believe most investors would agree with him.
What we do know is that Apple has done an excellent job running the business during the first six months of the year, based on the March results and June guidance…
Tariffs dominated the call’s discussion, accounting for seven of the 20 analyst questions. To manage the risk, Apple has ramped up production in India and Vietnam, with about half of U.S. iPhones now sourced from India, while the rest of the world continues to be supplied through China.
I estimate that 40–45% of total revenue remains tied to China-based manufacturing, which still makes the region a significant risk factor in Apple’s model.
MacDailyNews Take: Apple is not going to be hugely affected by U.S. import tariffs precisely because the most significant equity stock held in U.S. 401(k)s is Apple (AAPL). This is due to the fact that many 401(k) mutual funds and ETFs, especially those that are market-cap weighted, hold AAPL as their No.1 position. Funds like the Vanguard Institutional Index I, Fidelity 500 Index Fund Investor Class, and SPDR S&P 500 Index Fund, in which many working Americans are invested, all feature AAPL as a, if not the, prominent holding.
For that reason alone, not to mention ahead of the already-looming 2026 midterm elections, President Trump is not going to negatively impact Apple in any significant way via U.S. import tariffs. If Apple doesn’t receive explicit “exemptions,” it will receive them implicitly.
Take that to the bank.
As we wrote on March 19th:
If only we had seen how President Trump’s trade policies played out globally and how the markets reacted and responded previously.
Anyone who thinks Apple won’t get significant, meaningful U.S. import tariff exemptions hasn’t been paying attention. Profit from the panic of the uninformed and misinformed.
“Expect specific exemptions from U.S. import tariffs for important Apple products.” – MacDailyNews, February 2, 2025
Even with a myopic reactionary atop Apple’s org chart for far too long, we buy — and will continue to buy — AAPL on these overreactive dips… The engine Steve Jobs built is unparalleled. Apple has the capital and revenue generating capacity to overcome anything and everything its current leadership misses. – MacDailyNews, March 19, 2025
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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
The post Gene Munster: Uncertainty beyond June weighs on Apple stock appeared first on MacDailyNews.
