Apple slightly gains after earnings 🗽China sales misses estimates

Apple shares barely reacted to the solid financial results, as positive signals were balanced by negatives — most notably a sharp decline in sales in China, where patriotic consumer sentiment appears to be reducing interest in U.S. products in favor of domestic brands. Sales in the Americas also fell short of expectations. In the initial reaction, the stock dropped in after-hours trading, but quickly recovered to a 1.5% gain. On a yearly basis, Apple EPS and revenue came in up 13% and 8% respectively; quarterly up 18% and 9% respectively.

Earnings per share (EPS): $1.85 vs. $1.77 expected
Revenue: $102.47 billion vs. $102.19 billion expected

• iPhone revenue: $49.03 billion (+6.1% y/y)
• Product revenue: $73.72 billion vs. $73.49 billion expected
• Services revenue: $28.75 billion vs. $28.18 billion expected
• Mac revenue: $8.73 billion vs. $8.55 billion expected
• iPad revenue: $6.95 billion vs. $6.97 billion expected
• Wearables, Home & Accessories revenue: $9.01 billion vs. $8.64 billion expected
• Americas revenue: $44.19 billion vs. $44.45 billion expected
• Greater China revenue: $14.49 billion vs. $16.43 billion expected
• Total operating expenses: $15.91 billion vs. $15.75 billion expected

Apple declared a cash dividend of $0.26 per share. The company’s sales increased by 6% year-over-year in the Americas, 15% in Europe, 12% in Japan, and 14% in Asia (excluding China). The EBIT margin rose by double digits, while earnings per share nearly doubled year-over-year. Apple CEO Tim Cook stated that the decline in revenue in the Greater China region was caused by supply constraints and added that he does not predict when they will ease. The company expects a return to growth in the first quarter in China, driven by iPhone sales. Several iPhone 17 models are currently supply-constrained.

The company anticipates tariff-related costs of $1.4 billion in the December quarter and estimates a gross margin between 47% and 48%. The company’s CFO reported that so far, Apple has incurred $1.1 billion in tariff costs in the September quarter. The company is significantly increasing its investments in artificial intelligence (AI).

Source: xStation5