Apple’s stock fell 5% on Friday after the company cut its stock buyback program, and CEO Tim Cook announced a $900 million reduction in expenses due to trade tariffs this quarter, amid strained trade relations between China and the US. The tariff changes under US President Donald Trump have impacted corporate plans, even for companies like Apple, which, along with Microsoft, often competes for the title of the world’s most valuable company.
Apple is buying back stock to mitigate the potential impact of supply chain issues and rising import costs in the US. However, due to a decline in consumer confidence, some analysts note that the company may face weakening demand for iPhones in the domestic market.
The decision to reduce the buyback by $10 billion was a rare step back for a company that typically either maintains or increases buyback levels. The cut to $100 billion from the previously announced $110 billion surprised analysts.
US tariff increases on Chinese imports could lead to higher iPhone prices if Apple decides to pass on additional costs to consumers. However, according to Tim Cook, most of the devices sold in the US this quarter will be made outside of China. The last-minute exemption for consumer electronics also provides some relief.
On Thursday, Cook announced that Apple is ramping up efforts to move its supply chain out of China, and most iPhones destined for the US are now being made in India. This strategic move will also help the company avoid additional tariffs and expand its presence in the rapidly growing Indian market.
Despite these challenges, Apple reported quarterly sales of $95.36 billion and earnings per share of $1.65, slightly exceeding market expectations. The revenue growth forecast of low to mid-single digits reflects cautious expectations for the next quarter.
Competition in China with Huawei and the slower adoption of artificial intelligence continue to pressure Apple’s market share. Analysts predict that if the losses persist, the company may lose over $150 billion in market value, while Microsoft already holds an optimistic outlook and temporarily became the world’s most valuable company.
Tim Cook acknowledged that the changed supply chain and increased manufacturing in India will help reduce dependence on Chinese production and allow Apple to remain competitive in the global market.