Apple Shares Drop 3% on Tariff Concerns Despite Earnings Beat

Apple Inc. (AAPL) experienced a pre-market decline of nearly 3%, with shares trading at $207.86. The company released its second-quarter earnings report after the market closed on Thursday, revealing an earnings per share (EPS) of $1.65, slightly exceeding analysts' expectations of $1.62. Revenue for the quarter was $953.6 billion, which was slightly higher than the anticipated $945.9 billion. However, the company's revenue in the Greater China region was $160.0 billion, falling short of the expected $168.3 billion.

Despite the modest beat on earnings, Apple's stock faced downward pressure due to the anticipated impact of tariffs on its third-quarter costs. The company projected that tariffs would increase its costs by $9 billion for the upcoming quarter, with revenue growth expected to be in the lower half of the 0-10% range compared to the previous year. Apple CEO Tim Cook acknowledged the potential impact of tariffs on the company's operations, noting that the additional costs could affect future financial performance.

Cook also mentioned that the tariffs had a limited impact on the second quarter but did not announce any price increases. Additionally, while Apple's sales in the Greater China region did not meet expectations, the company's performance in China remained relatively stable when excluding the adverse effects of currency fluctuations.

Apple's board of directors authorized a stock buyback program of up to $1000 billion and increased the dividend payout. This move is seen as a way to return value to shareholders amidst the uncertainty surrounding tariffs and global economic conditions.

Overall, while Apple's second-quarter earnings slightly exceeded expectations, the company's outlook for the third quarter is clouded by the anticipated increase in costs due to tariffs. The impact of these tariffs on Apple's future financial performance remains a key area of focus for investors and analysts.