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Apple is bracing for tough questions on Thursday as it prepares to release its fiscal second-quarter results, with Wall Street analysts focused on delayed AI feature rollouts and mounting uncertainty from U.S.-China trade tensions.
Despite a boost in demand for the newly launched lower-priced iPhone 16e during the January-March quarter, Apple is still expected to report a slight decline in iPhone sales—a second consecutive quarterly drop. The looming threat of U.S. tariffs on Chinese-made electronics has added to investor unease, contributing to a 16% drop in Apple’s stock this year and wiping out over $600 billion in market value.
While electronics have so far escaped tariffs under the Trump administration, new levies could be announced soon. Apple, which manufactures about 90% of its products in China, is reportedly working to shift production of U.S.-bound iPhones to India in a bid to sidestep the impact. Analysts also expect the tech giant to absorb some tariff costs through its supply chain to avoid raising consumer prices.
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“Tariffs are a sword of Damocles for Apple – dangling, disruptive and politically charged,” said Eric Schiffer, chairman of the Patriarch Organisation, which holds Apple shares.
At the same time, Apple is under scrutiny for lagging behind rivals like Google and Samsung in deploying promised AI features. Notably, updates to its Siri voice assistant have been postponed until 2026, and a recent advertisement promoting unavailable AI functionalities was pulled. This delay is particularly damaging in China, where Apple’s market share is shrinking against domestic competitors like Huawei.
In the March quarter, iPhone shipments in China dropped by 9%—the only major smartphone brand to post a decline in the region, according to IDC. Although Apple has partnered with Alibaba to provide AI services in China, it has not committed to a rollout timeline.
Globally, however, Apple maintained its leadership in smartphone sales, aided by strong demand for the $599 iPhone 16e in India, according to Counterpoint Research.
Apple’s conservative, privacy-focused approach to AI has slowed progress, placing the company behind its peers, said Jacob Bourne, an analyst at eMarketer. “With tariffs threatening cost structures, Apple faces pressure to move faster on AI innovation and supply chain realignment—both of which are capital intensive,” he noted.
Despite these headwinds, Apple’s overall revenue is projected to grow 4.2% year over year in the quarter, driven by a rebound in iPad sales and continued strength in its services segment. Analysts forecast iPad sales to climb 9.1%, while services revenue is expected to grow by 11.8%.
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