Apple (AAPL) CEO Tim Cook said he is “confident” about several aspects regarding Apple’s business during the company’s fiscal second-quarter earnings call yesterday. However, he noted that he could not comment on the potential tariff impact beyond Q3 due to ongoing uncertainty. Cook said that if the situation remains the same, tariffs could increase costs by “only $900 million” in Q3. Considering that President Donald Trump’s stance on tariffs can change rapidly, predicting the future impact can be very difficult.
Despite exceeding analysts’ expectations on both sales and earnings, AAPL stock fell 3.8% in extended trading yesterday. Cook said that tariffs had a very “limited impact” on the March quarter and said that Apple was in continuous talks with the White House about future tariff policy. Meanwhile, the company continues to reward shareholders. Apple announced $100 billion in stock buyback and hiked the quarterly dividend by 4% to $0.26 per share.
Cook Says Country of Origin to Determine Tariff Impact
While addressing the tariff issue, Cook said that the country of origin will play a key role in determining the impact of tariffs. In Q3, he noted that a majority of Apple’s iPhones that will be sold in the U.S. will be manufactured in India. Additionally, Apple’s other products, including Macs and iPads will be manufactured in Vietnam. Importantly, both these countries face lower tariffs compared to China and could benefit Apple’s bottom line.
However, China will continue to be the country of origin for a vast majority of Apple product sales outside the U.S. Currently, imports from China to the U.S. attract a 145% duty, while India has a 27% tariff rate. There is optimism that India may become the first country to finalize a deal with the U.S. Meanwhile, Apple is keen on opening more retail stores in India by the end of 2025.
Overall, Cook said that the management will continue to lead the company as they always have “with thoughtful and deliberate decisions.” Looking ahead, Cook is “confident” about continuing to build the world’s best products and services, drive innovation, and run the business that always sets Apple apart.
Is Apple a Good Stock to Buy Now?
Heading into the earnings print, analysts remained divided about Apple’s long-term stock trajectory. On TipRanks, AAPL stock has a Moderate Buy consensus rating based on 18 Buys, seven Holds, and three Sell ratings. Also, the average Apple price target of $233.48 implies 9.5% upside potential from current levels. Year-to-date, AAPL stock has lost 14.7%.
Please note, this consensus rating was issued before Apple’s earnings release and is subject to change once analysts review their stock recommendations based on the results.
