• Apple’s record iPhone sales face $1.1 billion in upcoming tariffs.
• iPhone trails rivals concerns abuout as lack of AI persist.

Apple’s latest results showed a rebound in iPhone sales and a recovery in China, giving a lift to two areas that had been under pressure over the past year.

The better-than-expected quarter helped calm investor concerns about the company’s core business, even as it works to catch up with rivals in artificial intelligence and prepares for potential tariffs under President Donald Trump. As reported by CNN, CEO Tim Cook told analysts that tariffs could cost Apple $1.1 billion in the September quarter, up from $800 million in the last quarter.

For the three months ending in June, iPhone sales brought in $44.5 billion, topping analyst estimates of $40 billion and last year’s $39.3 billion for the same period. Overall revenue reached $94 billion, up 10%. In China, sales grew from $14.7 billion in the third quarter of 2024 to $15.3 billion.

Apple’s stock gained just over 2% in after-hours trading. That’s far less than Microsoft and Meta, which saw jumps of nearly 7% and over 9% on Wednesday after their financial announcements. Apple’s stock is down almost 15% this year, missing out on much of the broader tech rally.

A decade ago, a jump in iPhone sales might have been enough to spark excitement on Wall Street. Now, analysts are pressing Cook on how Apple plans to keep the iPhone relevant as AI changes how people interact with devices.

“It’s difficult to see a world where iPhone’s not living in it,” Cook said when asked about a future where people might rely more on voice assistants than screens. He said that Apple sees devices as working alongside each other, not replacing each other.

iPhone still at the centre

The iPhone remains Apple’s biggest source of revenue and a key focus for investors. Cook said the company set a record for June quarter iPhone sales, growing 13% from last year.

Shifting trade policies have forced Apple and other electronics makers to rethink manufacturing. To avoid new tariffs, Apple moved most production of US-bound iPhones from China to India earlier this year. Smartphones were previously exempt from a planned 145% tariff rate, but Donald Trump has warned that Apple and Samsung could face a 25% tariff unless they produce hardware in the US. A temporary deal has kept tariffs at 30% until August 12, though Trump recently suggested tariffs on India could also reach 25%.

Cook said Apple’s production approach hasn’t changed since last quarter, with “the vast majority” of iPhones sold in the US now coming from India. He also pointed out that around 19 billion chips are currently made in the US.

Pushing forward on AI

While tariffs are a near-term issue, Apple is also dealing with concerns over its AI strategy. The company has faced criticism for trailing behind rivals like Google, Microsoft, and Meta, who have moved faster in developing AI products.

A planned major upgrade to Siri has been delayed indefinitely, keeping the voice assistant behind newer AI systems like ChatGPT and Gemini. Cook told analysts that Apple is making “good progress” and plans to roll out the updated Siri next year. Current AI features are spread in Apple’s products, with tools like custom emoji creation, text summarisation, and image generation – features that add convenience but are far from the impact felt by users of the top AI platforms.

“We are also significantly growing our investments,” Cook said. “Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone. And that’s at the heart of our AI strategy with Apple Intelligence.”

Bloomberg reported recently that Apple has lost several AI researchers to Meta, which has been expanding its AI team. Cook said the company has reassigned “a fair number of people to focus on AI” and has acquired seven companies this year, though not all are AI specialists.

Recently, analysts at Lightshed Partners questioned whether Apple should consider replacing Cook with a CEO more focused on product development.

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