Needham sees 28% earnings drop for Apple without tariff exemption

Needham says Apple (AAPL) shares fell nearly 10% yesterday, losing about $300B of market cap, owing to President Trump’s new tariffs. Unless Apple gets an exemption, Needham calculates the company’s earnings per share will fall by over $2 on a pro forma basis, down 28% from the current fiscal 2025 earnings estimate of $7.32, the analyst tells investors in a research note. Needham believes Wall Street is betting there is a 30% chance Apple will get an exemption because Trump gave the company one in 2018 and Apple has committed to spending $500B in the U.S. over four years. The firm points out the 28% earnings decline is not the worst case, which would include China retaliating against the U.S. by banning all or some Apple product sales in China, which were 17% of the company’s total sales in 2024. Needham has a Buy rating on Apple with a $260 price target