Shares of Apple Inc. (AAPL) plunged nearly 4% on Friday early trading, dragged down by mounting concerns over tariff-related costs, weak growth projections, and sluggish sales in China.
The stock closed at $205.21, shedding more than $130 billion in market capitalization in a single day and marking a 19% decline year-to-date. The selloff followed two notable analyst downgrades and a cautious outlook from Apple’s leadership on how trade policies could impact its business in the months ahead.
Jefferies became the most bearish of the bunch, slashing its rating to “underperform.” Analyst Edison Lee warned that “the tariff impact will expand over time to create more earnings downside.” Rosenblatt Securities followed suit, cutting Apple to a neutral stance. Barton Crockett of Rosenblatt summed up the mood: “We’re left with a well-run company, with OK-muted growth… trading at a premium multiple, in a choppy tariff and regulatory environment.”
Investors were further rattled by Apple’s disclosure that it expects a $900 million cost hit from tariff-related changes in its supply chain for the June quarter alone. While the company beat revenue estimates and posted $46.8 billion in iPhone sales, the tepid forecast of low- to mid-single-digit revenue growth and ambiguity surrounding future tariffs amplified Wall Street’s unease.
India Rises as Apple Shifts Supply Chain Away from China
As the Trump administration intensifies its trade posture against China, Apple is accelerating its pivot toward India. CEO Tim Cook confirmed that Apple now produces 20% of its iPhones in India and intends to manufacture the vast majority of U.S.-bound units there by the end of 2026. The strategic shift is aimed at insulating the company from the fallout of U.S.-China tensions, including a 20% tariff that still applies to Chinese imports.
While India’s emergence as a manufacturing hub has been years in the making, it gained new urgency amid ongoing geopolitical friction. Apple’s deepening reliance on Taiwan Semiconductor Manufacturing Co. (TMC), which is expanding its Arizona operations, further reflects the company's push to diversify. Tens of millions of processors for iPads and Apple Watches will now come from U.S.-based TSMC facilities, part of a broader $500 billion investment pledge in the American economy.
Despite these efforts, some analysts caution that supply chain transitions are not a quick fix. Melius Research estimates that the cost of reworking Apple’s production footprint could ultimately double the current $900 million per quarter estimate. Meanwhile, there's no assurance that India and Vietnam won’t eventually be drawn into the trade fray themselves.
Muted Innovation, Conservative Spending Raise Questions About Future Growth
Beyond the headline tariff issues, Apple faces broader skepticism about its growth trajectory and innovation pipeline. Analysts expressed surprise at Apple’s decision to authorize a $100 billion stock buyback—lower than last year’s $110 billion. CFRA’s Angelo Zino suggested the move could signal an abundance of caution amid regulatory uncertainty and rising operating costs.
Meanwhile, expectations of a game-changing AI update to Siri remain unmet. Apple acknowledged delays in delivering “more personal” Siri features, which had been teased prominently at WWDC. “We need more time to complete our work on these features so they meet our high quality bar,” Cook said, offering little clarity on a release timeline.
The contrast with rival Microsoft (MSFT) was stark. While Apple stumbled, Microsoft shares surged nearly 3% after blowout results, allowing the software giant to eclipse Apple in market value once again. The divergence underscored a key concern among investors: while Microsoft rides the AI wave and expands aggressively into enterprise software, Apple’s core growth engine—hardware—may be nearing saturation.
Though some, like Citigroup’s (C) Atif Malik, maintain a “Buy” rating and view Apple’s outlook as conservative rather than weak, the broader sentiment has clearly cooled. Just under 60% of analysts tracked by Bloomberg now recommend buying the stock, well below the average for its mega-cap tech peers.
As Apple navigates a new world of fractured globalization, rising costs, and muted product excitement, Wall Street appears to be recalibrating its expectations—and its enthusiasm.
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