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- 🍎 Apple Drops -4% After Tariffs, Falling China Sales, and More
🍎 Apple Drops -4% After Tariffs, Falling China Sales, and More
Apple faces an 'existential threat' as it falls behind in the AI race with constant delays...
Maxwell Nicholson
May 04, 2025
BIG TECH EARNINGS
🍎 Apple Falls -4% and Amazon Falls Flat (In Sharp Contrast to Microsoft and Meta Last Week)
🔥 It was a big week this week with Microsoft, Meta, Apple, and Amazon all reporting earnings!
🚀 On Thursday, we talked about Meta and Microsoft’s exceptional results, leading to a massive week for both stocks. Meta ended the week up +7.5% and Microsoft up 11% (its biggest post-earnings gain in over 10 years).
😇 This wasn’t just good news for these companies - it cast a halo effect on the whole market as it eased worries of a ‘potential AI pullback’. As a result, all the major indexes soared:
📉 But while the rest of the market soared, Amazon fell flat, up only a measly +0.12% this week, and Apple fell, dropping -2.2% this week (and -3.9% since reporting earnings)
👀 So let’s see what’s going on with these two tech giants and why this week told such a different story for them compared to Microsoft and Meta, starting first with Apple…
📊 Despite the Drop, Apple Actually Beat Most Expectations
Before we discuss the reasons for the stock drop, let’s take a look at the numbers.
📊 Key Results:
🤑 Revenue: $95.4B, 4% higher than last year and 1% higher than analysts projected
📲 iPhone Revenue: $46.84B, 2% higher than last year and 2% higher than analysts projected
🇨🇳 China Sales: $16B, -2.3% lower than last quarter and -4.9% under analysts’ projections
☁️ Services Revenue: $26.7B, 11.7% higher than last year and -0.2% under analysts’ projections
💸 Earnings per Share: $1.65, 8% higher than last year and 1.2% higher than analysts projected
⚠️ By the numbers, it wasn’t the worst report for Apple, with most metrics beating expectations, but there were 4 major factors making investors nervous: Tariffs, a massive lawsuit loss, falling sales in China, and AI delays.
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BIG TECH EARNINGS
😰 Tariffs, Lawsuits, Falling Sales in China, and AI Delays All to Blame for Apple’s Decline
If the numbers were fine, why did the stock drop? There are actually 4 reasons to blame:
1) 💰 Tim Cook Warns of $900M Tariff
The first, and arguably the most obvious reason, is Trump’s tariffs, which Apple CEO Tim Cook estimates will add $900M in extra costs in the upcoming quarter.
While Apple has taken steps to move its US production away from China to avoid the 145% tariffs - with half of the iphones being produced for the US made in India - the tariffs will still be a major blow to Apple’s profitability, at least in the short term.
2) 🧑⚖️ Apple Loses Major Lawsuit, Damaging Apple’s Control of the App Store
This one I haven’t seen as widely reported, but this week Apple lost a major lawsuit to Epic Games, which seriously threatens Apple’s control over the App Store.
Epic Games, the creators of Fortnite, which back in December 2023 won a similar lawsuit against Google, just won a lawsuit that bans Apple from charging a commission on purchases made outside the App Store.
For apps (including Blossom), Apple takes a massive 15-30% cut of all payments and was previously blocking apps from directing users off-app to bypass this fee. With the recent ruling, Apple is no longer allowed to do this!
What’s interesting is the same judge in the current case actually issued a ruling back in 2021 saying that Apple was not unfairly monopolizing, but basically told Apple to stop blocking apps that allowed users to bypass the fee. From the new reports, it sounds like Apple basically ignored this ruling, with the judge saying:
“That Apple thought this Court would tolerate such insubordination was a gross miscalculation”
Apple will of course appeal the ruling, but this is potentially a serious blow to Apple’s Services Revenue, which has been its biggest growth driver to date.
3) 🇨🇳 Falling Sales in China
The most obvious ‘red’ in Apple’s earnings was its sales in China, falling ~5% under analyst expectations.
While only 17% of revenue, China was a major growth market for Apple, but has now just become a source of pain, as Apple loses ground to Huawei, Xiaomi, and Oppo.
4) 🤖 Continuous AI Delays Threaten iPhone Sales
Last but not least, Apple has continuously delayed its Apple Intelligence features - once hailed as the saviour for stagnating iPhone sales, it’s now become a major cause for concern, with the most influential tech YouTuber Marques Brownlee even making a scathing video about it.
Apple is under intense pressure from investors to prove it’s still a leader in the AI space, but while competitors like Google, Microsoft, and even Samsung are shipping real features, Apple has been slow and vague - repeatedly delaying AI features.
Some of these features (like a new and improved Siri) Apple is already using in marketing campaigns, but don’t even exist yet.
This disconnect between how successful Apple would like us to believe they are with AI and how poorly and delayed things are actually going — that is the crisis on Apple’s hands right now.
To me, this is a critical threat facing Apple and even as a new iPhone 16 owner, I’m pretty disappointed with the new features and feel like they certainly don’t match the hype.
👑 If Apple wants to keep its throne, it seriously needs to step it up, and based on all these reasons, I think the stock drop was very justified.
🌼 The Blossom community was mixed on Apple this week, with the stock ranking as the #19th Most Sold but also the #21st Most Bought. Apple still remains the 3rd Most Held stock in the US and the 4th Most Held in Canada on Blossom
😅 Since I spent too much time breaking down Apple (and ran a half-marathon this morning), I’ve run out of time to touch on Amazon - but for a great recap check out this article from CNBC and make sure to visit the Amazon stock page on Blossom to see what the community is thinking!
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FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week
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