Apple Inc. (AAPL) Earnings Preview: Navigating Growth, Tariffs, and AI Innovation

[Redator]

Most Read: USD/CAD Breakout Gathers Pace After Bank of Canada Rate Hold

Apple (AAPL) will release its fiscal Q3 2025 earnings on Thursday, July 31, 2025, after the market closes. This report covers April to June, a quieter period before Apple’s big fall product launches. A conference call to discuss the results and share updates will follow at 2:00 p.m. PT / 5:00 p.m. ET.

What to Expect?

Analysts expect Apple to show modest year-over-year growth in Q3 FY25. Earnings per share (EPS) are predicted to be $1.42–$1.43, slightly up from $1.40 last year. Revenue is forecasted at $88.92–$89.18 billion, matching Apple’s guidance for "low to mid-single-digit" growth. Gross margins are expected to be 45.5%–46.5%, factoring in a $900 million tariff impact.

The Services segment is expected to lead growth with double-digit revenue, estimated at $26.9–$27.5 billion. iPhone sales should see slight growth, helped by promotions and the new iPhone 16e. Mac sales are also expected to rise, thanks to M4 chip upgrades. However, iPad revenue is likely to drop after a strong previous quarter.

Source: Created by Zain Vawda, Google Gemini

To provide context for the upcoming report, Apple's performance in the fiscal second quarter of 2025 (ended March 29, 2025) serves as a benchmark:

Revenue: $95.4 billion, reflecting a 5% year-over-year increase and landing at the high end of the company's guidance range.

Diluted EPS: $1.65, an 8% year-over-year increase, setting a new March quarter record and surpassing analyst consensus estimates which ranged from $1.61 to $1.63.

Services Revenue: Achieved an all-time high of $26.6 billion, demonstrating robust 12% year-over-year growth.

Gross Margin: Reported at 47.1%.

Apple’s expected gross margin for Q3 FY25 (45.5%-46.5%) is slightly lower than Q2 FY25 (47.1%) due to a $900 million tariff impact. This shows that geopolitical trade tensions are now directly affecting Apple’s profitability.

The company is absorbing these extra costs, which is reducing its margins. This highlights the challenge Apple faces in keeping its high profits in a complicated global trade environment and emphasizes the importance of its efforts to diversify its supply chain.

Key Areas to Focus On - Segment Performance Analysis

Apple’s Q3 FY25 revenue is expected to show modest growth, with iPhone sales projected at $39.8–$40.61 billion, up 2.2%–3.3% year-over-year. The new iPhone 16e and strong sales in China, driven by discounts and government subsidies, have supported growth despite tough competition from local brands like Huawei. However, maintaining this momentum may require continued aggressive promotions, which could impact profitability.

The Services segment remains Apple’s strongest growth driver, with revenue forecasted at $26.9–$27.5 billion, reflecting 10.7%–11.3% growth. This segment benefits from a growing user base, over 1 billion paid subscribers, and strong App Store sales, providing a stable, high-margin revenue stream.

Mac sales are expected to grow 2.2%–5%, supported by M4 chip upgrades and back-to-school demand, while iPad revenue may decline after a strong Q2. Wearables and accessories face challenges, with no major product updates to boost sales.

Source: Created by Zain Vawda, Google Gemini

Tariffs remain a significant concern, with a $900 million impact on Q3 gross margins (45.5%–46.5%). Apple is addressing this through supply chain diversification, shifting iPhone production to India and Vietnam. By 2027, 25% of iPhones are expected to be made in India. Apple is also investing $500 billion in U.S. facilities, including a new AI server factory in Texas.

While Apple has absorbed costs so far, rising tariffs and production expenses may lead to selective price increases, particularly for high-end models.

External Concerns - Tariffs and Apple’s Supply Chain Strategy

Tariffs remain a major challenge for Apple, with an estimated $900 million impact on Q3 FY25 profits, reducing gross margins to 45.5%-46.5%. Former President Trump’s threat of a 25% tariff on iPhones not made in the U.S. could add $110 to the cost of each device, increasing pressure on Apple’s pricing and profitability.

To address these risks, Apple is accelerating its "China Plus One" strategy, shifting production to India and Vietnam. By late 2024, 15% of iPhones were made in India, up from 5% two years earlier, with plans to reach 25% by 2027. Most iPhones sold in the U.S. are now made in India, boosting U.S. imports of Indian-made smartphones by 240% in Q2 2025. Vietnam now produces nearly all iPads, Macs, Apple Watches, and AirPods for the U.S. market.

Source: Created by Zain Vawda, Google Gemini

Apple is also investing $500 billion in U.S. facilities, including a new AI server factory in Texas, and stockpiling inventory to manage tariff risks. While Apple has absorbed costs so far, analysts warn that rising tariffs and production expenses may lead to selective price increases, particularly for high-end models like the iPhone 17.

Forward Outlook - Apple’s AI Strategy and Market Outlook

Apple is heavily investing in AI, focusing on features like Siri upgrades, Live Translation, and tools for smarter apps and photos. However, delays in AI rollouts and talent losses to competitors like Meta pose challenges. Privacy-focused on-device AI limits Apple compared to rivals, but its AI-powered Apple Silicon remains a key strength.

The tech market is growing, with global IT spending expected to rise 9.3% in 2025, driven by AI and software demand. Consumer interest in smart-home, gaming, and health-tech devices aligns with Apple’s ecosystem strategy, offering opportunities in AI-enabled wearables.

Source: Created by Zain Vawda, Google Gemini

Apple continues strong shareholder returns, with $29 billion in Q2 FY25 buybacks and dividends, plus a $100 billion repurchase plan. Analysts remain optimistic, with a $230.92 price target (9.3% upside). Shares trade near $212.48, with resistance at $215-$216 and potential to retest $250 highs if momentum builds.

Technical Analysis

From a technical standpoint, Apples share price has been in a period of consolidation since late April.

2025 has not been an easy year for Apple shares given its exposure to China and concerns about a trade war.

The chart below, you can see the significant selloff since early December 2024, which has continued for the majority of 2025.

Lower highs and lower lows were being printed until early April before the consolidation period.

Now looking ahead and a positive trade deal with China coupled with trade deals with a host of other countries could set the tone for a bullish breakout.

Furthermore, a positive earnings release and a plan for AI may be what is needed for bulls to return to the fold and push prices back toward 2025 highs.

Immediate support rests at 204.60 before the lower band of the range at 193.16 comes into focus.

Looking at the upside, immediate resistance rests at 217.00 before the 225.00 handle comes into focus.

Apple Daily Chart, July 30, 2025

Source: TradingView

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2025 OANDA Business Information & Services Inc.