iPhone 16 Pro Max phones are seen on display at an Apple store in the Huangpu district in Shanghai. Photo: HECTOR RETAMAL / AFP
By Stephen Nellis, Reuters
Apple on Thursday (US time) reported sales and profit that far surpassed expectations, with some customers making iPhone purchases early to avoid US President Donald Trump's tariffs.
Apple said it earned US$94.04 billion (NZ$155.2 billion) in revenue for its fiscal third quarter ended 28 June, up nearly 10 percent from a year earlier and beating analyst expectations of US$89.54 billion (NZ$147.7 billion), according to LSEG data. Its earnings per share of US$1.57 (NZ$2.59) per share topped expectations of US$1.43 (NZ$2.36) per share. Apple shares were up about 2 percent in after-hours trading.
Sales of iPhones, the Cupertino, California, company's best-selling product, were up 13.5 percent to US$44.58 billion (NZ$73.6 billion), beating analyst expectations of US$40.22 billion (NZ$66.4 billion).
Apple has been shifting production of products bound for the US, sourcing iPhones from India and other products such as Macs and Apple Watches from Vietnam. Still, the company had warned investors that US tariffs could cost it US$900 million (NZ$1.49 billion) in the fiscal third quarter, and it trimmed its annual share buyback program by US$10 billion (NZ$16.5 billion), a move analysts viewed as helping to free up cash to remain nimble in uncertain times.
The ultimate tariffs many Apple products could face remain in flux, and many of its products are currently exempt. Sales in its Americas segment, which includes the US and could face tariff impacts, rose 9.3 percent to US$41.2 billion (NZ$68.0 billion).
In Greater China, where Apple has faced long delays in approval to introduce AI features on its devices, sales were US$15.37 billion (NZ$25.4 billion), up from a year ago and above expectations of US$15.12 billion (NZ$25.0 billion), according to a survey of five analysts from data firm Visible Alpha. That gain was a turnaround from a year-over-year decline in China sales in the March quarter.
Early purchases
In an interview with Reuters, Apple CEO Tim Cook said the company set seasonal records for upgrades of iPhones, Macs, and Apple Watches. He said Apple estimates about 1 percentage point of its 9.6 percent of sales growth in the quarter was attributable to customers making purchases ahead of potential tariffs.
"We saw evidence in the early part of the quarter, specifically, of some pull-ahead related to the tariff announcements," Cook told Reuters, though he also said the active user base for iPhones hit a record high in all geographies.
The US is still negotiating with both China and India, with Trump saying India could face 25 percent tariffs as early as Friday. However, analysts said India could still retain cost advantages for Apple in the longer term.
"The results show that Apple's iPhone strategy is working to offset the impact of looming challenges with AI development timelines (and) tariff pressures," said Emarketer analyst Jacob Bourne.
Tariffs are only one of Apple's challenges. The company faces competition from rivals such as Samsung Electronics Co in a tough market for premium-priced mobile phones. On the software front, Apple faces challenges from Alphabet, which is quickly weaving AI features into its competing Android operating system.
While AI leaders Microsoft and Nvidia have seen their stock market values soar to record highs, Apple's shares have fallen 17 percent in 2025, with investors concerned about the impact of tariffs, and about what they view as slow progress integrating AI features into its products.
Apple has delayed the release of an AI-enriched version of Siri, its virtual assistant, but Cook said the company is "making good progress on a personalised Siri." He also said Apple, which has thus far not engaged in the massive capital expenditures of its Big Tech rivals to pursue AI, is "significantly growing" its investments in artificial intelligence.
"Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone, and that's at the heart of our AI strategy," Cook said.
Apple faces regulatory rulings in Europe that threaten to undermine its lucrative App Store business. Apple said sales from its services business, which includes the App Store as well as music and cloud storage, were US$27.42 billion (NZ$45.2 billion), topping analyst expectations of US$26.8 billion (NZ$44.2 billion).
Sales of wearables such as AirPods and Apple Watches were US$7.4 billion (NZ$12.2 billion), missing estimates of US$7.82 billion (NZ$12.9 billion). Mac sales of US$8.05 billion (NZ$13.3 billion) beat expectations of US$7.26 billion (NZ$12.0 billion), while iPads hit US$6.58 billion (NZ$10.9 billion) in sales, missing expectations of US$7.24 billion (NZ$11.9 billion).
Apple said gross margins were 46.5 percent, beating analyst expectations of 45.9 percent, according to LSEG estimates.
- Reuters
