Here's our initial take on Apple's (AAPL -2.37%) fiscal 2025 third-quarter financial report.
Key Metrics
| Metric | Q3 FY24 | Q3 FY25 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $85.8 billion | $94.0 billion | 10% | Beat |
| Earnings per share | $1.40 | $1.57 | 12% | Beat |
| iPhone revenue | $39.3 billion | $44.6 billion | 13% | Beat |
| Services revenue | $24.2 billion | $27.4 billion | 13% | Beat |
Apple Posts Strong Growth Despite Macro Headwinds
Investors came into earnings season with questions about Apple's ability to weather the impact of tariffs, and the company answered by reporting robust growth. Apple said revenue grew by 10% and earnings per share by 12%, boosted by stronger-than-expected iPhone growth in the quarter.
The sales growth, in a quarter marred by tariff talk, is a reminder of the enduring popularity of the iPhone and the success of a new, more affordable model released earlier this year. Apple has responded to the tariff concerns by shifting shipping patterns, with a majority of iPhones sold in the U.S. now reportedly assembled in India and not China.
Apple had forecast low- to mid-single-digit growth in the quarter, predicting a $900 million headwind from tariffs in the period.
Apple also returned to growth in China, posting sales of $15.4 billion for the quarter compared to $14.7 billion in the same three months of 2024.
The company did not provide a Q4 forecast in the earnings report, but is likely to give some guidance about what it expects in the second half of calendar year 2025 during its call with investors.
Immediate Market Reaction
Investors were happy with the results. Apple stock was up 2% in aftermarket trading immediately following the release but ahead of the company's call with investors.
What to Watch
Apple's numbers were strong, but that was expected. The big question with Apple is not about the numbers, but about what comes next. Apple's AI efforts have floundered so far, and top execs have fled to rivals. There have been reports that Apple could find a partner to bring AI to its devices instead of continuing to develop in-house.
Expect a lot of investor questions about AI on the call, as well as a focus on future devices that Apple can add to its offering along with phones, computers, iPads, and wearables. There is also still a looming uncertainty about tariffs, with tariff exemptions on smartphones expected to lapse and talk of new India tariffs that could further complicate supply chains.
Apple is yet to answer the question about the "next big thing," be it AI or a new device, but the company's core franchises remain massively profitable and show no signs of sputtering from here.
