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Last week, tech giant Apple (AAPL) briefly lost its crown as the world’s most valuable public company to Microsoft (MSFT) as investor anxiety mounted over steep tariffs on Chinese imports. The stock has faced intense selling pressure ever since President Donald Trump announced import duties on China, which are now as high as 145%. Apple assembles roughly 90% of its products in China, and while it managed to dodge the tariff bullet during Trump’s first administration, this time it’s not getting a free pass.
Investors are growing uneasy over Apple’s heavy dependence on China. And while Apple has made efforts to diversify its manufacturing footprint to countries like India, Japan, South Korea, Taiwan, and Vietnam, that global reach is offering little relief as Trump-era tariffs strike across the board. To make matters worse, analysts at Needham are projecting a sharp 28% drop in Apple’s bottom line for fiscal 2025.
With trade tensions flaring, earnings under threat, and investor sentiment turning cautious, is it time to buy, sell, or hold AAPL stock now?
About Apple Stock
Cupertino-based tech titan Apple (AAPL) presently holds a market cap of approximately $2.98 trillion. While the iPhone still remains its flagship product, its services segment is quietly stealing the show, raking in steady, high-margin revenue from cloud offerings, such as the App Store, Apple Music, AppleCare, and Apple Pay. Meanwhile, Apple has also carved out a commanding lead in the Wearables and Hearables space, driven by the massive success of the Apple Watch and AirPods.
Yet, despite its unmatched brand strength, shares of the iPhone maker have tanked almost 20% so far this year amid tariff chaos. In the longer term, the stock is still up roughly 14.8% over the past 52 weeks.
Apple Beats Q1 Earnings Projections
Apple kicked off its fiscal 2025 on a strong note, delivering yet another record-breaking quarter that underscored its resilience and market dominance. For the first quarter, which was revealed on Jan. 30, the tech giant posted revenue of $124.3 billion, marking a 4% year-over-year increase and a new all-time high for the company. The reported figure also narrowly topped analysts’ expectations of $124 billion.
Product sales drove the bulk of that figure, with revenue rising 2% annually to roughly $98 billion. However, the real standout was Apple’s high-margin services division, which soared 14% year over year to a record $26.3 billion. Digging further into the product segment, the company’s iPhone sales, although still a major cash cow, saw a slight dip to $69.1 billion, showing some softness in Apple’s flagship category.
The real surprise came from a rebound in Apple’s iPad and Mac divisions. Mac revenue surged 15.5% year over year to $8.9 billion, and iPad sales followed suit with a 15.2% annual climb to $8.1 billion. On the earnings front, the company’s EPS jumped 10% year over year to $2.40, beating Wall Street’s forecast figure of $2.36.
Looking forward to the second quarter, Apple expects revenue to increase in the low to mid-single digits compared to the prior year. Services revenue is projected to rise at a low double-digit pace, while gross margin is anticipated to fall within a range of 46.5% to 47.5%.
What Do Analysts Expect for Apple Stock?
According to Needham analysts, Apple’s fiscal 2025 EPS could plunge by 28% if the company fails to secure an exemption from President Donald Trump’s “Liberation Day” tariffs. The firm warns that this isn’t even the worst-case scenario, which could involve China retaliating by banning some or all Apple product sales, jeopardizing the 17% of revenue the tech giant generated from the region in fiscal 2024.
Needham’s analysis assumes Apple maintains unit sales volumes while absorbing the full impact of increased costs, keeping consumer prices unchanged. However, Apple’s Services revenue is expected to remain unaffected by the tariffs.
On April 12, Trump temporarily exempted consumer electronic products including smartphones from 125% tariffs, leaving a 20% levy in place on imported products from China. However, the temporary nature means Apple only has some reprieve.
Overall, Wall Street still remains somewhat optimistic about AAPL, sticking to a consensus “Moderate Buy” rating. Of the 36 analysts offering recommendations, 18 advocate a “Strong Buy,” four give a “Moderate Buy,” 11 say it’s a “Hold,” and the remaining three suggest a “Strong Sell.” The average price target of $244.11 represents potential upside of 19%, while the Street-high target of $300 suggests an 47% rally from current levels.
