Apple Inc. heads into Thursday’s earnings report facing growing challenges, including U.S. tariffs, intensifying competition in China, and delayed advances in artificial intelligence.

Once regarded as the most stable of the Big Tech firms, Apple now contends with a more uncertain global landscape.

U.S. Tariffs Threaten Apple’s Supply Chain Shift

U.S. President Donald Trump has targeted Apple’s overseas manufacturing, threatening 25% tariffs on foreign-made iPhones.

In response, Apple shifted the production of U.S.-bound iPhones to India. However, Trump on Wednesday imposed a 25% tariff on goods imported from India starting August 1.

According to research firm Canalys, the total volume of Indian-made smartphones surged 240% in the second quarter, largely due to Apple’s supply chain transition.

Analysts now expect this move will reduce the impact of tariffs to well below the $900 million Apple had estimated in May.

“IPhones are a very high-profile product that both the Chinese and the U.S. governments understand they have a lever over,” said Gil Luria, analyst at D.A. Davidson.

“So until the tariff rates get settled, Apple is very much at risk of being impacted by the current trade dispute.”

Jamie Meyers, senior analyst at Laffer Tengler Investments, said, “Most companies we follow have made conservative assumptions by overestimating tariff costs as the goal of management is generally to beat its own guidance.”

iPhone Sales Show Modest Growth in China

Sales of iPhones are expected to have increased 2.2% in Apple’s fiscal third quarter, according to data from LSEG, supported by improved demand in China. This follows a 1.9% increase in the previous quarter.

Counterpoint Research reported that iPhone sales in China rose 8% during the April-June period.

The growth was driven by significant discounts during the 618 shopping festival, government-supported trade-in subsidies, and targeted promotions for the iPhone 16 Pro.

Delayed AI Strategy Raises Investor Doubts

Apple’s deliberate approach to artificial intelligence has raised concerns among analysts.

The company was slow to introduce its Apple Intelligence suite, which includes ChatGPT integration. A major AI update to Siri has been delayed until next year.

Analysts noted that domestic Chinese firms, such as Honor, are launching smartphones with AI features like generative AI photo editors, contributing to uncertainty over Apple’s long-term position in the market.

Services Revenue Expected to Lead Growth

While device sales may have slowed during the April-June period, Apple’s services segment remains strong.

Analysts project a 10.7% increase in services revenue for the fiscal third quarter, following an 11.6% rise in the January-March period.

Wall Street forecasts a 4.2% increase in total revenue for the April-June quarter, reaching $89.34 billion.

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This article was created with AI assistance.