Apple CEO Tim Cook speaks at an Apple special event at Apple Park in Cupertino, California on September 7, 2022. – Apple is expected to unveil the new iPhone 14. (Photo by Brittany Hosea-Small / AFP) (Photo by BRITTANY HOSEA-SMALL/AFP via Getty Images)
Brittany Hosea-small | Afp | Getty Images
Analysts expect Apple to post its first year-over-year revenue decline since 2019’s March quarter when it reports earnings on Thursday. There are a few contributing factors.
The company couldn’t build enough of its high-end iPhones when its primary assembly facility in China was shut down for weeks during Covid lockdowns. Customers in many regions noticed as early as November that Apple couldn’t promise Christmas delivery of a new iPhone.
Apple gave a rare warning to investors that month explaining that production issues would result in lower shipments than “previously anticipated.” It was a data point that caused many analysts watching the stock to cut their estimates.
“We believe the peak impact of the disruptions was felt in early to mid November as wait times hit an extreme level (link) as the wait time in the US for the 14 Pro and 14 Pro Max reached 34 days while wait time in China at the high-end hit 36 days,” UBS analyst David Vogt wrote in January.
Analysts polled by Refinitiv expect Apple to report just over $121 billion in revenue in the December quarter, which would be a slight decline from the company’s $123.9 billion from a year ago.
But the problems aren’t Apple-specific. The PC and smartphone markets are slumping as consumers and businesses digest sales from the pandemic and cut costs to prepare for a possible recession.
The smartphone market saw an 18% decline in shipments in the fourth quarter, according to IDC, the worst decline ever recorded by the market research firm. The PC market fell 28% in the fourth quarter, according to the company. But many investors believe that Apple is outperforming its competitors even in a contracting market.
“While the state of consumer demand remains a near-term concern, we believe the underlying drivers of Apple’s model – a growing installed base and spend per user – remain intact, and that the strength/stability of Apple’s ecosystem remains undervalued,” Morgan Stanley analyst Erik Woodring wrote in a note earlier this month.
Here’s what Wall Street is expecting, according to Refinitiv consensus estimates:
Revenue: $121.19 billion
Earnings per share: $1.94 per share
iPhone revenue: $68.29 billion
iPad revenue: $7.76 billion
Mac revenue: $9.63 billion
Other products revenue: $15.26 billion
Services revenue: $20.67 billion
Apple’s March quarter guidance
Apple hasn’t given guidance since 2020, citing uncertainty first caused by the pandemic. However, the company usually provides a few data points that can give analysts a sense of how it’s doing.
Investors want to know whether the shortage of iPhone 14 Pro models in the December quarter will drive demand in the March quarter now that supply has improved.
Analysts expect just over $98 billion in sales in the March quarter, according to consensus estimates, signifying slight year-over-year growth.
“While we believe it’s well understood that Apple’s March quarter revenue should decline at a less-than-seasonal rate due to the pushout of iPhone demand from the December quarter to the March quarter,” Morgan Stanley’s Woodring wrote in a note last week, “the consumer electronics spending backdrop remains challenging, with tablets, PCs and more discretionary products (i.e. wearables) all facing continued demand headwinds.”
But if consumer confidence erodes in the face of higher interest rates and shrinking savings around the world, then Apple could suggest to investors that the company’s March quarter will be slow.
“While we don’t expect the resumption of detailed guidance typical of Apple earnings prior to Covid, we expect the commentary to be cautious regarding Product demand across the board,” UBS’s Vogt wrote.
If management commentary is soft, investors looking for a silver lining might want to look at Apple’s services business, which is profitable and has been growing strongly for years. However, several data points in the fourth quarter, including Apple’s own App Store payouts, suggest a significant slowdown in App Store growth, although analysts are split on its severity.
The App Store is one of the largest components of services, but it’s only a part of the business, which includes online subscriptions, warranties and search licensing fees. Apple shares could push higher if services such as Apple TV+ and Apple Music look like they’re generating a higher percentage of Apple’s revenue, D.A. Davidson analyst Tom Forte wrote in January.
Services are expected to total $20.67 billion in the December quarter, according to Refinitiv estimates, representing a 5.9% growth rate.
Analysts will also watch to see if the strong dollar continues to hurt Apple, given that so much of its sales are overseas. During the December quarter, the British pound, the Canadian dollar and the Japanese yen all weakened compared to the dollar. Apple management previously said the strong dollar would be a 10 percentage point drag on sales growth.
US President Donald Trump (r) and Apple CEO Tim Cook speak to the press during a tour of the Flextronics computer manufacturing facility where Apple’s Mac Pros are assembled in Austin, Texas, on November 20, 2019.
Mandel Ngan | AFP | Getty Images
President Donald Trump said in a social media post Friday morning that Apple will have to pay a tariff of 25% or more for iPhones made outside the United States.
“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,” Trump said on Truth Social.
Shares of Apple fell more than 2% in premarket trading.
Production of Apple’s flagship phone happens primarily in China, but the country has been shifting manufacturing to India in part because that country has a friendlier trade relationship with the U.S..
Some Wall Street analysts have estimated that moving iPhone production to the U.S. would raise the price of the Apple smartphone by at least 25%. Wedbush’s Dan Ives put the estimated cost of a U.S. iPhone $3,500. The iPhone 16 Pro currently retails for about $1,000.
This is the latest jab at Apple from Trump, who over the past couple weeks has ramped up pressure on the company and Cook to increase domestic manufacturing. Politico previously reported that Trump and Cook met at the White House on Tuesday.
Cook gave $1 million to Trump’s inauguration fund and attended the inauguration in January. Apple has announced a $500 billion spend on U.S. development, including AI server production in Houston.
Apple declined to comment for this story.
Trump has made public criticisms of other major U.S. companies, including Walmart, during his trade war push, but the levies on a specific consumer product is a new step. The exact legal mechanism for the tariff is unclear.
As Apple is caught in the U.S. president’s crosshairs, the company is also seeing weak demand in China. On Friday the company hiked trade-in incentives for iPhones in China.
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People stand in front of an Apple store in Beijing, China, on April 9, 2025.
Tingshu Wang | Reuters
Apple on Friday raised the amount of money people can get off their next iPhone in China by trading in their old device, rolling out further incentives to spur demand in a crucial market.
The iPhone 15 Pro Max now has a trade-in value of up to 5,700 Chinese yuan ($791), an increase from 5,625 yuan previously. For reference, a brand new iPhone 15 Pro Max starts at 7,999 yuan in China. The iPhone 15 Pro model can now be traded in for up to 4,750 yuan, up from 4,725 prior.
There are also trade-in value increases across other models too.
Apple has looked to offer discounts over the last year, especially around holiday periods in China. While the latest hikes are not huge, they signal Apple’s ongoing desire to galvanize sales in the world’s second largest economy, where it has faced falling market share and declining sales amid tougher competition from local rivals.
In the first quarter of the year, Apple’s China shipments fell 8% year-on-year, while the company’s share of the smartphone market in the country declined from 15% to 13%, according to data from Canalys. Apple also reported this month that sales in its Greater China region, which includes Hong Kong and Taiwan, fell slightly on an annual basis.
But Apple’s China headache goes beyond sales to questions over its supply chain and products. While U.S. President Donald Trump has paused most tariffs on China for now, there is still an ongoing discussion about whether chips and other electronics may receive a special duty.
Xiaomi, which was the biggest player by market share in China in the first quarter, has meanwhile been ramping up its presence in the high-end device space to directly compete with Apple. On Thursday, the company launched the Xiaomi 15S Pro smartphone that contains an in-house developed chip — something very few companies in the world have managed to do successfully.
Xiaomi has also committed nearly $7 billion to develop more chips over the next 10 years, signaling its ambition to compete with Apple and Huawei.
Though the difference between the two brands’ monthly sales totals is relatively small, the implications of BYD beating out Tesla “are enormous,” says Felipe Munoz, global automotive analyst at JATO Dynamics.
Jaap Arriens | Nurphoto | Getty Images
Despite incurring a higher tariff rate than Tesla, Chinese electric vehicle maker BYD sold more pure battery electric vehicles in Europe for the first time ever last month — a “watershed moment” for the region’s car market, according to a report from JATO Dynamics.
New car registrations data from the automotive intelligence firm shows that BYD’s Europe volumes rose 359% in April from last year as the company continues its global expansion efforts.
Over the same period, Tesla reported yet another monthly drop, with total volumes down 49%, JATO said. That follows protests against CEO Elon Musk and the company in the region. JATO’s data comes from 28 European nations.
BYD’s success in the EU comes despite the economic bloc’s imposition of punitive tariffs on battery EVs made in China last October. The EU attributed the move to unfair trade practices.
The punitive tariffs appeared to be favorable to Tesla, assigning its made-in-China vehicles a 7.8% duty compared with BYD’s 17%. Other Chinese EV makers were given tariffs as high as about 35%. The EU also has a standard 10% car import duty.
Emerging battleground
Felipe Munoz, global automotive analyst at JATO, said the difference between the two EV makers’ April sales was relatively small, but that the implications of BYD beating out Tesla “are enormous.”
JATO added that BYD is also beating well-established European car brands across the region, outselling Fiat and Seat in France, for example.
“This is a watershed moment for Europe’s car market, particularly when you consider that Tesla has led the European BEV market for years, while BYD only officially began operations beyond Norway and the Netherlands in late 2022,” Munoz said.
BYD’s growth comes even before production begins at its new plant in Hungary, which is expected to become the center of European production operations.
“Europe is emerging as a central battleground between BYD and Tesla,” Liz Lee, associate director at technology market research firm Counterpoint Research, told CNBC. She added that the region is expected to experience higher electric vehicle market growth this year than China, which already has high EV penetration.
The tariffs have provided more impetus for Chinese EV makers like BYD to localize manufacturing in the region, according to Lee. Tesla is also reportedly working on plans to expand its manufacturing base in Germany.
JATO’s report said that while tariffs had an initial impact on the sales of Chinese automakers, the companies have mitigated it by expanding and diversifying their European line-ups with the introduction of plug-in hybrids.
“China is not only the world leader in BEVs; its automakers are global leaders in plug-in hybrid vehicles too,” Munoz said.
Battery EVs run entirely on electricity, while hybrid vehicles combine an electric battery with an internal combustion engine. Hybrid vehicles have not yet been targeted by EU tariffs.
Meanwhile, there has been growing demand in the region’s EV segment, with JATO data showing that registrations of battery EVs and plug-in hybrid electric vehicles are up by 28% and 31%, respectively, despite declines among internal combustion engine vehicles.
Registrations of all electric vehicles made by Chinese automakers in April rose by 59% year on year, reaching almost 15,300 units in April, the report added.
Ahead of the EU’s tariff decision last year, Rhodium had predicted that tariffs would need to be as high as 55% for the European market to be unattractive for Chinese EV exporters.
In March, it was revealed that Tesla, which only sells pure battery vehicles, fell behind BYD in total annual sales.
Tesla’s shares have fallen over 10% over the same period amid blowback from Musk’s involvement with the administration of U.S. President Donald Trump. The CEO recently committed to leading Tesla for the next five years.
BYD shares were up 3.9% in Hong Kong trading on Friday and have surged about 78% year to date.
