Narratives can change pretty swiftly on Wall Street, dragging even the biggest companies into discussions that were largely ignored only a few months ago.
Apple ( AAPL ) , which earlier this year was under fire for failing to devote the proper resources to its AI investment thesis, made no mention of tariffs on its first-quarter conference call in January. In fact, just 10 days after President Donald Trump was inaugurated, CEO Tim Cook would say only that the world's biggest tech company was "monitoring the situation."
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Last night, however, during Apple's March-quarter earnings call, tariffs were mentioned 27 different times as Cook conceded that the administration's 145% levy on China-made goods, as well as baseline tariffs of 10% on virtually every other U.S. trading partner, would add a $900 million cost headwind to the current quarter.
That's shifted investor concern from Apple's AI investments to its supply chain, and the speed with which it can transition from overreliance on China-based production to avoid being caught in the crosshairs of the escalating trade war between Washington and Beijing.
Most U.S. iPhones this quarter will likely come from India, rather than China, Cook said, while other Apple hardware is expected to originate in Vietnam.
"What we learned some time ago was that having everything in one location had too much risk with it," Cook told investors late Thursday. "And so we have, over time, with certain parts of the supply chain, not the whole thing but certain parts of it, opened up new sources of supply. And you could see that kind of thing continuing in the future."
Apple still managed a solid March quarter, the second in its unusual fiscal calendar, with overall revenue rising 5% from a year earlier to $95.36 billion, topping Wall Street forecasts, and iPhone sales rising 2% to $46.84 billion.
The group expects current-quarter revenue to rise in the low-single-digits percent, suggesting an overall tally of between $86.6 billion and $90.1 billion, with profit margins narrowing to reflect the $900 million in tariff costs.
Related: Analysts revisit Apple stock price targets as Cook courts Beijing
KeyBanc analyst Nispel: Tariff overhang to extend
KeyBanc Capital Markets analyst Brandon Nispel, however, says the tariff overhang is likely to last well into the back half of the year and drag on Apple's share-price performance at the same time.
"We think Apple's tariff-mitigation efforts are likely better than most expect, but at the end of the day we believe it's likely a little-to-no-growth business, where expectations continue to call for an acceleration in growth into 2026," he said in a note published Friday.
Related: Fed inflation gauge sets up stagflation risks as tariff policies bite
Wedbush analyst Dan Ives says, however, that Apple was able to find some "breathing room" from the tariff uncertainty through the shift to its India supply chain, enabling it to introduce the new iPhone 17 later this autumn without a major disruption in its key market, the U.S.
"The demand environment appears stable for Apple and the guidance for June was generally in line with expectations, and we were surprised the company actually gave an outlook at all given the tariff complexity," he said.
"It feels like Apple has a very good grip around this very complex tariff issue with Cook being 10% politician and 90% CEO," Ives added.
China suggests thaw in trade talks. But...
How that mix, which Ives suggests could be as high as 20%/80% in the current tariff climate, changes Apple's near-term performance is anyone's guess.
Shares in the group have fallen nearly 18% from their late-December peak and were last marked 2.95% lower in premarket trading at $207.02 each.
China has suggested a potential thaw in U.S. trade relations, through a statement from its Finance Ministry that it's "evaluating" an overture from Washington. But it also warned that "attempting to use talks as a pretext to engage in coercion and extortion would not work."
Related: Analysts revisit Apple stock price target as Trump offers tariff relief
Apple is also getting only a minimal tailwind from infusing Apple Intelligence, its artificial-intelligence system, into its new suite of iPhones, and a pullback in consumer spending over the coming months will cloud both its iPhone 17 launch and sales of its hardware and services.
That could be why Apple undershot expectations in its plan to buy back shares, which was pegged at $100 billion.
"We found this a bit of a head-scratcher, as Apple historically either holds its buyback or increases its authorization versus the prior year," said CFRA analyst Angelo Zino. He suggested the group was keeping some of its buyback powder dry amid the tariff concerns.
Cook, however, struck an upbeat tone as he navigated investors into the murky uncertainty of a global trade war.
"For our part, we will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term, and with dedication to innovation and the possibilities it creates," he said.
"As we look ahead, we remain confident, confident that we will continue to build the world's best products and services and confident that we can continue to run our business in a way that has always set Apple apart."
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