Apple's June-quarter rebound offers momentum, but AI, tariffs, and product shifts pose questions

Apple reported its strongest quarterly growth since 2021, with revenue up 9.6% year-over-year to US$94.04 billion in the third quarter of fiscal 2025, driven by strong iPhone and Services sales. The results highlight opportunities in AI and China, while raising questions about future demand amid tariff and competitive pressures.

According to the latest financial results released on July 31, Apple's revenue rose 9.6% year-over-year to US$94.04 billion in the third quarter of fiscal 2025. Net profit climbed 9.3% to US$23.43 billion while operating income rose 11.2% to US$28.2 billion. Gross profit also expanded 10.2% from a year earlier to reach US$43.72 billion.

Apple CEO Tim Cook said the company was proud to report a June quarter revenue record, highlighting double-digit growth in iPhone, Mac, and Services, along with gains across all geographic segments. He added that at WWDC25, Apple unveiled a refreshed software design spanning all platforms and introduced new Apple Intelligence features.

CFO Kevan Parekh said Apple was very pleased with its record business performance in the June quarter, which delivered 12% growth in earnings per share. He noted that the installed base of active devices reached a new all-time high across all product categories and regions, driven by strong customer satisfaction and loyalty.

Product sales totaled US$66.61 billion, up 8.2% from a year ago, with iPhone revenue growing 13% to US$44.58 billion. Mac sales jumped 15% to US$8.05 billion, while iPad revenue declined 8.1% to US$6.58 billion. The wearables, home, and accessories segment saw an 8.6% year-over-year drop to US$7.40 billion.

Services revenue, a key growth engine for Apple, rose 13% year-over-year to US$27.42 billion, shrugging off concerns that recent App Store fee adjustments would weigh on performance. Bloomberg Intelligence noted the resilience of the services segment, suggesting that the gains show little impact from fee reductions.

Regionally, Greater China revenue rose 4.4% to US$15.37 billion, with Wedbush analysts calling the improvement a "major step in the right direction" as Apple gears up for the iPhone 17 cycle. Sales in the Americas climbed 9.3% to US$41.20 billion, while Japan surged 13% to US$5.78 billion. Europe and the rest of the Asia Pacific also posted solid gains of 9.7% and 20%, respectively.

Guidance

Apple expects its total revenue for the September quarter to grow in the mid to high single digits year-over-year. Services revenue is projected to increase at a similar year-over-year rate as reported in the June quarter. Gross margin is anticipated to range between 46% and 47%, factoring in approximately $1.1 billion in tariff-related costs.

Operating expenses are forecasted to be between US$15.6 billion and US$15.8 billion. Operating income and expenses (OI&E) are expected to be around negative US$25 million, excluding any mark-to-market impacts from minority investments. The tax rate is estimated to be approximately 17%.

Additionally, the board of directors has declared a cash dividend of US$0.26 per share of common stock, payable on August 14, 2025, to shareholders of record as of August 11, 2025.

Analysts' views

Analysts offered mixed views on what drove the upside. Bloomberg Intelligence cited possible pull-forward sales due to tariff concerns, while Evercore ISI questioned whether the revenue beat was sustainable. CFRA, however, described the performance as "stellar," pointing to broad-based strength across products and regions.

Despite the strong quarter, Apple's AI roadmap remains in focus. Wedbush cautioned that the company's future growth will heavily depend on how it positions itself in the emerging AI space.

According to Bloomberg, the results eased worries that tariffs and challenges related to artificial intelligence were negatively impacting Apple's business. Additionally, the company has been making a recovery in China, a market where domestic smartphone brands have gained traction among consumers.

Source: Apple, July 2025

Source: Apple, July 2025

Source: Apple, July 2025

Article edited by Jack Wu