Apple Beats Expectations, But China Sales Weigh On Stock

By Kristoff De Turck - reviewed by Aldwin Keppens

Last update: May 2, 2025

Apple (AAPL | +0.39%) posted strong Q2 results that exceeded Wall Street expectations, but a drop in Chinese revenue and caution about upcoming growth led to a dip in the stock price during after-hours trading.

Quarterly Highlights:

Revenue: $95.4 billion (+5% YoY), beating estimates of $94.25 billion
Earnings per Share: $1.65 (vs. $1.62 expected)
Net Income: $24.8 billion (up from $23.6 billion YoY)
Free Cash Flow: $24 billion
iPhone Sales: $46.8 billion (1.7% YoY increase)
Services Revenue: $26.6 billion (up from $23.9 billion YoY)

Despite the overall strong report, Apple shares dropped nearly 3% after hours.

The main concern? A 2.3% decline in revenue from China, falling short of expectations and highlighting challenges in one of Apple’s most important international markets. CEO Tim Cook acknowledged the softness and emphasized the company’s ongoing shift in production to countries like India and Vietnam to avoid the brunt of US-China trade tensions.

Apple is also preparing for $900 million in additional costs next quarter due to US tariffs. Cook noted, however, that a growing portion of iPhones sold in the US will now be produced in India, a strategic move to lower exposure to geopolitical risk.

AI and “Apple Intelligence”

Cook shared updates on Apple’s AI developments, branded “Apple Intelligence.” The tech giant is working with OpenAI while also building its own large language models. He confirmed that iPhone 16 will include on-device AI processing for improved privacy. A more personal version of Siri is still under development due to Apple’s high quality standards.

Interestingly, regions where Apple Intelligence features have launched are already showing above-average iPhone sales growth, suggesting that AI integration may begin to pay off.

More Cash to Shareholders

Apple announced a 4% dividend hike to $0.26 per share, alongside a massive $100 billion share buyback program, reinforcing its commitment to shareholder returns.

Outlook

For Q3, Apple expects low to mid single-digit revenue growth, slightly below analysts’ expectations of 5%.

The market currently anticipates:

EPS: $1.46
Revenue: $88.9 billion

While China remains a headwind, Apple’s long-term strategy—diversified production, service growth, and AI integration—shows promise for sustained performance.

Charts

Short Term Trend - BULLISH
Long Term Trend - BEARISH
Support at $210 - $190
Resistance at $225- $250