• Apple's 2Q revenue expected to rise 4% to $94.1 billion, following a 4% decline a year earlier.

• EPS could be up 6% to $1.61, reflecting the company's ability to maintain profitability even in a challenging market environment.

• Operating margin may expand roughly 55 bps to 31.3, showcasing Apple's continued pricing power and efficiency improvements.

Apple is expected to report its 2Q fiscal 2025 earnings on Thursday, May 1 after market close. Analysts expect Apple’s revenue to come in at $94.124 billion and adjusted net income to be $24.265 billion. Adjusted earnings are likely to be $1.612 per share, according to Bloomberg's unanimous expectations.

Key Areas to Watch

Apple Takes Top Spot for First-Quarter Smartphone Sales

iPhone sales, which accounted for 56% of the company's revenue in Q1 FY25, will be closely scrutinised. Apple took the top spot for global smartphone sales in the first quarter on the back of the iPhone 16e's launch and strong demand in countries such as Japan and India, data from Counterpoint Research showed.

Services, now the second-largest revenue contributor, is expected to grow by approximately 12% year-on-year. The sustainability of this growth trajectory is crucial, particularly as Apple seeks to offset slower hardware sales with recurring revenue streams.

Apple had 19% of the smartphone market, despite flat or declining sales in the U.S., Europe and China.

Global smartphone shipments rose 1.5% in the first quarter, according to the International Data Corporation, which tracks mobile phone shipments, with Apple rushing to stockpile units to avoid tariffs imposed by U.S. president Donald Trump.

Apple had chartered cargo flights to ferry 600 tons of iPhones, or as many as 1.5 million, to the United States from India in an effort to beat the tariffs.

Apple Supply-Chain Likely to Dominate the call

Apple's sourcing strategy will likely remain the most discussed topic on its 2Q earnings call given the company's high dependency on China for both assembly and components. While smartphones have been exempted from the bulk of China-related tariffs, the risk of those surcharges returning remains, putting focus on Apple's ability to assemble products outside of China. In terms of sales, Apple may report better-than-expected results across most of its products given the pull-forward in demand from consumers amid higher tariff fears.

However, Apple's demand is likely to weaken in 3Q with iPhone sales declining compared with a year ago due to weak consumer spending, lack of any new hardware upgrade and the recent pull-forward in demand.

Management's guidance on navigating US-China trade tensions will be essential. Investors will look for clarity on whether Apple plans to absorb tariff costs, renegotiate with suppliers, adjust pricing, or further diversify its supply chain beyond China to locations like India and Vietnam. If Apple decides to adjust product pricing, a key question is whether these increases will be targeted specifically at US consumers or distributed across global customers.

From a geographic perspective, North American customers contributed 42% of Apple's revenue in the previous quarter. This heavy reliance on US clients makes the company particularly sensitive to US trade policies and domestic economic conditions.

Apple's China Gamble at Risk as Global Tariff War Heats Up

Apple faces growing risks as trade tensions between the United States and China intensify, according to TF International Securities analyst Ming-Chi Kuo.

Kuo said the company could weather higher tariffs if they are limited to the United States by shifting supply and adjusting prices. But if U.S. allies also raise barriers, Apple would be forced to speed up moving production out of China a shift he called risky and hard to control.

Apple has made early moves into India and Vietnam, but Kuo said the company remains heavily reliant on China, especially for iPhone assembly. Broad-based tariffs could hit Apple's supply chain and margins before it can fully diversify, he said.

While some analysts say full U.S.-China economic decoupling remains unlikely, Kuo cautioned that the short-term risks for Apple are rising sharply.

In addition to product assembly, Apple heavily relies on Chinese suppliers for critical components such as speakers and camera lenses. This dependency on the Chinese supply chain for both manufacturing and parts procurement compounds the company's exposure to trade tensions.

Although electronics and smartphones received temporary exclusion from high reciprocal tariffs, the Trump administration has indicated these products will be included in upcoming semiconductor sectoral tariffs. Implementation could occur within one to two months, potentially disrupting Apple's cost structure.

Analysts' Opinions

Citi lowers earnings forecasts for Apple's Chinese suppliers on expectations for lower iPhone shipments. Citi expects global iPhone shipments to decline 1% in 2025 to 226 million due to the anticipated slowdown in the world economy, before recovering slightly to 232 million in 2026.

It has yet to factor in the possibility that Apple might raise iPhone retail prices to pass tariff costs on to consumers. Although suppliers would not pay tariffs themselves or accept price cuts to share the tariff cost burden, the analysts still think their profitability will be hit.

Goldman Sachs lowered the firm’s price target on Apple to $256 from $259 but keeps a Buy rating on the shares ahead of its Q2 results. Apple should deliver strong fundamental results driven by new product innovation and resulting channel fill, sell-through pull-forward on tariff-related price increase concerns, rising U.S. carrier competitive intensity, and solid Services performance, the analyst tells investors in a research note.

MoffettNathanson Research keeps its Sell recommendation on Apple shares cited a combination of geopolitical shifts, increased production costs due to tariffs, and the rising probability of a recession as weighing on Apple stock.

MoffettNathanson noted the thicket of issues that Apple has to navigate regarding tariffs — and that the company is caught in the middle because of China’s importance in the global electronics supply chain.

“Paying a fortune in tariffs or paying a fortune in rearchitecting supply chains only to finish with much higher costs is a lose-lose choice,” the analysts said. “Moving production to the U.S. for an ecosystem that employs as many as three million people in China at wage rates as low as $3 per hour is self-evidently a non-starter.”