Tariffs and Promotions Cloud Apple’s Margin Outlook, Says MoffettNathanson

Raymond James reiterated its Outperform rating and $250 price target on Apple (NASDAQ:AAPL), but warned that looming reciprocal tariffs could significantly impact the tech giant’s earnings in 2025.

With more than 90% of Apple’s hardware produced overseas—primarily in China and India—the company could face steep import duties under the proposed U.S. tariff policy. Chinese-manufactured products may be subject to a combined 54% tariff, while Indian-sourced items could see 26%, creating a substantial cost burden.

Given that the Americas accounted for 43% of Apple’s fiscal 2024 revenue and U.S. sales represent about a quarter of its total, the potential hit to earnings could be severe. Analysts estimate that, assuming no exemptions and tariffs go into effect on January 1, Apple’s 2025 earnings per share could take a 25% hit unless countermeasures are implemented.

While Apple’s growing manufacturing diversification outside China may offer some buffer, raising U.S. product prices by approximately 30% appears to be the most direct way to offset the tariff-related margin squeeze. However, such a move carries the risk of dampening domestic demand, and could even spark retaliatory trade responses from other nations, further pressuring Apple’s global performance.

Raymond James is holding its forecasts steady for now, awaiting clarity on the scope and duration of the tariffs, as well as Apple’s strategic response to the challenge.

UBS reiterated its Neutral rating and $236 price target on Apple (NASDAQ:AAPL), noting that iPhone sell-through trends turned negative year-over-year in February, particularly in China and Europe, where the company continues to lose market share.

According to UBS’ review of Counterpoint data, global iPhone sell-through dropped by 1% YoY, even as the broader smartphone market remained relatively flat. The declines were most pronounced in China (down 17%) and Europe (down 12%), signaling increasing competitive pressure in those regions.

While Apple did gain roughly 215 basis points of share in the U.S., overall iPhone sales in the region were still down 1%, reflecting a 5% contraction in the U.S. smartphone market during February amid muted promotional activity.

On a more positive note, Apple saw sell-through gains of about 20% in India and other emerging markets, though these increases came against easier comparisons from last year.

Initial demand for Apple’s latest SE model also underwhelmed, with only 300,000 units sold in its first month, far below the 700,000 units sold during the SE 2022 debut and a fraction of the 2.4 million units sold in the first month of the 2020 version.

UBS maintains a cautious stance, seeing limited upside in the near term as Apple navigates softening demand in core regions and lukewarm reception to its latest budget offering.

Citi analysts reiterated a Buy rating on Apple (NASDAQ:AAPL) with a price target of $275.00, highlighting the company’s long-term growth prospects despite near-term macroeconomic concerns.

The analysts noted that Apple’s much-anticipated Siri upgrade, initially expected in the iOS 18.4 update in April, has been delayed, leading Citi to close its previous catalyst watch from January 31.

While economic headwinds and consumer spending uncertainties persist, Citi believes Apple’s expansive active installed base of devices and subscription services provides a strong foundation for sustained demand. The company’s integrated ecosystem of hardware, software, and services remains a key differentiator, allowing it to maintain user loyalty and drive long-term revenue growth.

Apple is also expected to benefit from gross margin expansion, fueled by a higher average selling price (ASP) mix in iPhone sales, deeper penetration in emerging markets, and cost reductions through in-house cellular chip development. Additionally, the growing share of high-margin services revenue should further enhance profitability.

Citi sees further upside potential from new product categories, including AR/VR, which are not fully factored into current estimates. With these drivers in place, the firm maintains its bullish outlook on Apple’s long-term growth trajectory.

• Marjorie Taylor Greene purchased shares of Apple Inc. (NASDAQ:AAPL).
• Apple faces technical challenges with its Siri update, potentially delaying its release and impacting its AI market position.
• Despite a slight decline in iPhone sales, Apple reports a 4% increase in sales, with its stock price currently at $244.60.

On February 12, 2025, Marjorie Taylor Greene made a significant investment in Apple Inc. (NASDAQ:AAPL), a leading technology company renowned for its innovative products such as the iPhone, iPad, and Mac computers. Apple competes with tech giants like Samsung and Google across various sectors, including smartphones and digital services.

Apple is currently navigating technical challenges with its Siri update, as reported by Bloomberg News. The new AI-powered version of Siri is encountering software bugs, causing delays in its release. Initially scheduled for April, some features might now be postponed until May. This delay could affect Apple's efforts to solidify its position in the competitive AI market.

Despite these hurdles, Apple has reported a 4% increase in sales, propelled by growth in its services sector. However, iPhone sales have seen a slight decline of 0.8%, attributed in part to regulatory issues and the phased rollout of AI technologies. This decline is notably significant in the Chinese market, where sales have plummeted by 11.1%. These factors may have influenced Warren Buffett's decision to offload shares of Apple.

In addition to addressing these challenges, Apple is focusing on enhancing its Vision Pro headset, incorporating Apple Intelligence and new features. Bloomberg News reports that these updates are expected to be available in beta for developers soon, with a comprehensive rollout anticipated by April. This initiative is in line with Apple's strategy to broaden its footprint in the AI and augmented reality domains.

Currently, Apple's stock price stands at $244.60, marking a 1.27% increase today. The stock has experienced fluctuations between $241.00 and $245.41 during the trading day. Over the past year, AAPL has reached a high of $260.10 and a low of $164.08. With a market capitalization of approximately $3.67 trillion, Apple continues to be a dominant force in the tech industry.

• Bank of America Securities reaffirms its "Buy" rating for Apple Inc. (NASDAQ:AAPL), with a stock price of $236.87.
• Apple's partnership with Alibaba aims to enhance AI features on iPhones in China, a crucial market for Apple.
• The collaboration has led to a positive impact on Alibaba's stock, indicating market confidence in this strategic move.

Apple Inc. (NASDAQ:AAPL) is a leading technology company known for its innovative products like the iPhone, iPad, and Mac. On February 13, 2025, Bank of America Securities maintained its "Buy" rating for Apple, with the stock priced at $236.87. This endorsement reflects confidence in Apple's strategic moves and market position.

A significant development for Apple is its partnership with Alibaba to enhance AI features on iPhones sold in China. This collaboration is crucial as China is a key market for Apple. Alibaba's chairman confirmed the partnership, emphasizing the importance of integrating advanced AI capabilities into Apple's products in China.

The partnership announcement positively impacted Alibaba's stock, which rose by 2.5% following the news. Alibaba's Hong Kong-listed shares increased by 2.80 HKD to 116.6 HKD, with a year-to-date rise of 43%. This collaboration highlights the strategic importance of AI in Apple's efforts to regain market share in China.

Apple has faced challenges in China, with a 17% decline in iPhone sales in 2024 due to competition from Huawei and Vivo. Analysts have pointed out Apple's lack of advanced AI features as a weakness. In response, Apple introduced Qwen 2.5, an enhanced AI model that outperforms competitors in performance and cost.

Despite Apple's silence on its 'Apple Intelligence' initiative in China, the company plans to launch this AI strategy in the U.S. later this year. The partnership with Alibaba is a strategic move to strengthen Apple's position in the Chinese market, where domestic brands have already introduced AI features in their devices.

Apple (NASDAQ:AAPL) remains well-positioned to navigate potential tariff headwinds, according to BofA Securities analysts, who reaffirmed a Buy rating and a $265 price target on the stock. Despite the recent 10% tariff imposed by the U.S. on Chinese imports, BofA believes that any earnings impact on Apple will be minimal, whether the company absorbs the additional costs or chooses to pass them on to consumers through higher pricing.

In the previous tariff cycle, Apple successfully secured an exemption for the iPhone, and while it's uncertain if the company will receive a similar exception this time, historical precedent suggests the possibility remains. The analysts conducted a detailed earnings impact analysis under two potential scenarios: Apple maintaining current pricing in the U.S. and Apple raising prices to offset tariff costs. Regardless of the approach, they expect only a limited effect on Apple's earnings, reinforcing the company's financial resilience.

Beyond the tariff discussion, Apple may find a more favorable regulatory environment should a Republican administration take office. BofA analysts point to the ongoing Department of Justice (DOJ) cases involving both Apple and Google, suggesting that a political shift could result in more lenient outcomes for Big Tech. Additionally, U.S. leadership could push for reduced regulatory oversight from European counterparts regarding the Digital Markets Act (DMA), a set of laws that could impact Apple's App Store and business practices.

Looking ahead, the analysts remain bullish on Apple's long-term potential, highlighting its stable cash flows, earnings durability, and ability to benefit from AI advancements—particularly in edge computing on Apple devices.