Apple reported stronger-than-expected earnings for the second quarter of fiscal year 2025. However, its shares dropped by nearly 4% in extended trading as concerns over declining China sales and ongoing tariff uncertainty weighed on investor sentiment.
Revenue from Greater China fell by 2.3% year-on-year to $16 billion (€14 billion) in the three months to March, following an 11% drop in the previous quarter. The figures highlight intensifying competition from Chinese smartphone brands and Apple’s slower progress in artificial intelligence development. By contrast, sales in the United States—Apple’s largest market—increased by 8% from a year earlier, though CEO Tim Cook said there was no evidence of consumers front-loading purchases ahead of tariffs.
Apple anticipates a $900 million (€796 million) increase in costs for the June quarter due to tariffs, assuming no further levies are introduced during the period. Cook warned during the earnings call that the forecast beyond June is “very difficult” due to uncertainties surrounding US-China trade policy. Although US President Donald Trump exempted electronics from reciprocal tariffs on China in mid-April, they remain subject to a 20% import levy under measures targeting fentanyl issues.
Amid escalating trade tensions, Apple is reportedly preparing to shift assembly of all iPhones for the US market to India as soon as next year. However, in an interview with CNBC, Cook said the majority of Apple’s products for other regions are still being manufactured in China.
Apple’s shares have now fallen 16% year-to-date following the post-earnings drop. The company projected low-to-mid single-digit percentage growth in revenue for the current quarter, below analysts’ expectations for a 5% rise.
Despite the uncertain outlook, Apple raised its quarterly dividend by 4% to $0.26 (€0.23) per share and announced a new $100 billion (€88.42 billion) share repurchase programme approved by the board of directors.
Apple surpasses expectations in the March quarter
Apple’s total revenue rose 5% year-on-year to $95.4 billion (€84.4 billion) for the March quarter, ahead of the $94.6 billion (€83.65 billion) consensus forecast. Earnings per share came in at $1.65 (€1.46), beating the expected $1.62 (€1.43).
“Today Apple is reporting strong quarterly results, including double-digit growth in Services,” said Tim Cook. “We were happy to welcome iPhone 16e to our lineup, and to introduce powerful new Macs and iPads that take advantage of the extraordinary capabilities of Apple silicon. And we were proud to announce that we’ve cut our carbon emissions by 60 percent over the past decade.”
iPhone sales reached $46.8 billion, up 1.7% year-on-year, buoyed by demand for the more affordable iPhone 16e. However, the model’s limited AI features have made it less competitive in China, where domestic rivals like Xiaomi and Vivo are gaining market share.
Apple’s most profitable division, Services, which includes Apple TV+, iCloud, and the App Store, posted a 12% increase in revenue to $26.7 billion (€23.6 billion). This marked a slowdown from the 14% growth seen in the prior quarter, as the business faced increased scrutiny from EU regulators over so-called “anti-steering” rules. Domestically, Apple is also under regulatory pressure from the US government regarding third-party payment systems in its App Store.
Sales of Mac and iPad devices both rose year-on-year, up 7% and 15% respectively. During the quarter, Apple released updated MacBook Air and Mac Studio models, as well as new iPad Air models featuring M3 chips.
By contrast, the Wearables, Home and Accessories segment—which includes Apple Watch and AirPods—saw a 5% decline in revenue. Cook attributed this drop to a base effect following the launch of the Vision Pro headset in the same period last year.
