Speaking during the company’s latest earnings call, Cook revealed that Apple is facing an estimated $900 million in additional tariff-related costs this quarter due to the increasingly volatile trade relationship between the United States and China. While he aimed to reassure investors, the forecast has stirred concerns about longer-term growth strategies and supply chain stability.
To mitigate these pressures, Apple confirmed that it is accelerating efforts to shift iPhone production from China to India — a strategic move aimed at reducing exposure to trade tariffs and supply chain bottlenecks.
“It looks like Apple is progressing faster than expected with its move to shift production of U.S. phones into the region [India],” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. Analysts at Wedbush echoed this assessment, referring to India as Apple’s "life raft supply chain" as the company navigates through tariff turbulence.
Cook stated that Apple has been stockpiling devices to ensure most of the units sold in the U.S. this quarter will not originate from China — a move designed to cushion the impact of upcoming tariff actions that may affect electronics, despite current exemptions.
Investor Uncertainty Persists
Despite these proactive steps, investor sentiment remained cautious. The $900 million impact, though smaller than some had anticipated, failed to fully allay fears about the company’s near-term profitability and long-term production strategy.
“Tim Cook did his best to reassure investors… but many likely came away still wanting more clarity about what lies beyond June,” Britzman noted.
Apple’s challenges extend beyond geopolitics. The company has been facing increasing competition in China — one of its most critical markets — where domestic rivals like Huawei are gaining ground, bolstered by faster deployment of AI capabilities and nationalistic consumer sentiment. This has compounded the strain from softer consumer spending globally.
“The question for investors is what can replace China for Apple? This is not an easy question to answer and could threaten the long-term trajectory of Apple’s growth plan,” said Kathleen Brooks, research director at XTB.
Broader Market Context
While Apple struggles with global supply chain shifts and geopolitical uncertainties, other tech giants have outperformed expectations. Alphabet, Microsoft, and Meta Platforms reported strong quarterly earnings, largely driven by advancements in artificial intelligence. In contrast, Amazon's cloud division delivered slower-than-expected revenue growth.
Consumer electronics and chipmaking companies — more directly impacted by consumer budget tightening — also reported muted outlooks. Qualcomm, Samsung Electronics, and Intel have each faced similar macroeconomic headwinds.
Apple’s stock has declined about 15% year-to-date, underperforming key peers. In comparison, Meta has seen a 2.3% dip, while Microsoft shares have gained nearly 1%. Apple’s forward 12-month price-to-earnings ratio stands at 27.63, just shy of Microsoft’s 28.64 but notably higher than Meta’s 21.48 — a valuation premium that some analysts believe may face pressure if growth prospects continue to dim.
As Apple adjusts its production footprint and contends with external pressures, the market will be watching closely to see whether these strategic shifts can preserve its profitability and global dominance.