Apple has long been recognized for its innovation, but recently the company has also relied on strategic negotiations to advance its business interests.
Apple CEO Tim Cook successfully secured exemptions from tariffs on Chinese-made iPhones, allowing the company to concentrate on growth despite ongoing trade tensions.
The introduction of a more affordable iPhone model in February, along with robust sales from its apps and services divisions, helped Apple achieve a quarterly profit of $24.78 billion, marking a 4.8 percent increase year-over-year. Total revenue climbed 5 percent to reach $95.36 billion.
These figures outpaced Wall Street's forecasts, which anticipated $24.37 billion in profit and $94.35 billion in revenue. Despite this, Apple's shares dropped more than 2 percent during after-hours trading.
Apple's consistent performance occurred amid challenges, including the setbacks of its anticipated artificial intelligence system and the impact of tariffs imposed on imported products.
In recent months, Apple’s stock value declined sharply following the imposition of tariffs by the U.S. administration on Chinese exports, where 80 percent of its iPhones are manufactured, as well as tariffs affecting production in countries like Vietnam. These measures wiped out approximately $770 billion from the company’s market capitalization within four days.
Market analysts had projected iPhone prices could rise from $1,000 to as high as $1,600, prompting many customers to purchase devices ahead of the expected price increase, boosting sales.
Following a personal donation to the U.S. presidential inauguration, Tim Cook engaged with the administration to ease tariff pressures, resulting in temporary relief on the tariffs affecting Apple’s products.
During the quarter, iPhone sales—the company’s core revenue driver—increased by 2 percent to $46.84 billion. Notably, sales in Japan, India, and the Middle East rose by over 10 percent, helping Apple secure the largest global smartphone market share for the quarter, according to market research firm Counterpoint Research.
However, Apple continues to face difficulties in China, registering its sixth consecutive quarter of declining sales there. Revenue from this region fell 2 percent year-over-year to $16 billion.
Ben Bajarin, principal analyst at Creative Strategies, notes that "current stability is maintained since prices have not yet increased. The key question remains: how will further tariffs impact the company?"
Apple's services segment, which encompasses app sales, Apple Music, and Apple Pay, outperformed its hardware division, generating $26.65 billion in revenue—an 11.6 percent increase compared to the previous year.
Nevertheless, the outlook for Apple’s services business faces uncertainty. In a recent antitrust ruling, a federal judge restricted the company’s ability to collect a 27 percent commission on app sales conducted outside its App Store, potentially diminishing a significant revenue source.
In another antitrust case, Apple risks losing up to $20 billion in revenue from Google, which pays to be the default search engine on iPhone browsers. A federal judge recently acknowledged Google’s unlawful monopoly practices and is considering measures that might limit these payments.
Apple’s hardware business also faces challenges. The company introduced a generative AI system last year aimed at enhancing email management, notifications, and its virtual assistant Siri, branding it as a compelling reason to upgrade iPhones. However, in March, Apple withdrew advertisements promoting these features and announced delays, pushing some updates to later this year.
