Apple Faces $900 Million Tariff Hit Despite Strong Q2 Earnings

Apple is facing significant challenges from new U.S. tariffs, which are expected to increase costs by $900 million in the third quarter as the company shifts iPhone production for the U.S. market from China to India. Despite reporting stronger-than-expected Q2 profits and announcing a $100 billion share buyback, Apple's share price declined due to concerns about future margins and ongoing tariff risks. Analysts predict further pressure on gross margins and have trimmed price targets, warning that tariffs could hurt Apple’s earnings by up to 10% in the next two years and may result in higher iPhone prices for U.S. consumers. Apple is also dealing with continued legal scrutiny over its App Store practices, including the risk of criminal contempt charges for not fully complying with a court injunction. Meanwhile, Wall Street remains moderately optimistic, citing strong early iPhone sales ahead of tariffs and Apple’s efforts to diversify its supply chain by increasing production in India and Vietnam. However, with two consecutive quarters of declining iPhone sales projected and delays in new AI features, Apple’s near-term outlook remains uncertain.