Tech giant, Apple Inc. (NASDAQ:AAPL), has warned investors that it expects to incur a $1.1 billion hit from the tariff-related costs during its fiscal fourth quarter.
Check out the current price of AAPL stock here.
What Happened: During its third-quarter earnings call on Thursday, Apple CEO Tim Cook confirmed that the company’s tariff costs are set to increase from $800 million during its June quarter to over $1 billion.
According to Cook, tariff expenses are “up quarter over quarter because our volume is up quarter over quarter,” while he added that “there was some build ahead in the previous quarter,” which refers to Apple ramping up production to get ahead of the tariffs and the resulting supply-chain disruptions.
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Cook further outlined how Apple’s manufacturing footprint has evolved in recent months, saying that “the majority of the iPhones sold in the United States have a country of origin of India,” while the rest of its product portfolio, comprising MacBooks, iPads, iWatches, and more, that are sold in the U.S., now come from Vietnam.
Discussing the measures the company has since undertaken to mitigate these costs, Cook says, “we will do more in the United States,” referring to the $500 billion in investments that the company has committed to the U.S. over the next four years.
The company’s CFO, Kevan Parekh, echoed Cook’s comments, saying that “The tariffs are currently… pretty linear with volume,” but warned that they were still uncertain regarding what the rates will be.
Why It Matters: Amid growing tensions between the United States and China, India has become the top exporter of smartphones to the U.S., with Apple’s iPhone making a significant chunk of this trade.
Yet, early this week, President Donald Trump announced that India would be paying a 25% tariff on exports to the U.S., “plus a penalty” for buying Russian energy and military equipment.
Early this year, Apple committed to investing $500 billion in the United States, across data centers, Apple Intelligence infrastructure, and even Apple TV+ productions.
Leading Apple analyst, Ming-Chi Kuo, however, believes that the company would rather absorb the 25% tariff on the iPhones than move assembly lines back to the U.S.
The company released its third-quarter results on Thursday, reporting $94 billion in revenue, significantly ahead of estimates at $89.04 billion. It posted a profit of $1.57 per share, which was again ahead of consensus estimates at $1.42 per share.
Price Action: Apple shares were down 0.71% on Thursday, trading at $207.57, but have since surged 2.42% after hours.
According to Benzinga’s Edge Stock Rankings, Apple currently scores poorly on most key metrics, but has a favorable price trend in the short and medium terms. Click here for deeper insights into the stock, its peers and competitors.
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