By Dan Gallagher

When it comes to the new trade war, Apple investors are banking on warning shots.

The biggest tech company by market value is also the most directly exposed to cross-border tariffs-particularly with China. Hardware products account for three-quarters of Apple's annual revenue, and most of those products are manufactured in China. BofA Securities analyst Wamsi Mohan estimated last month that 10% tariffs on Chinese imports could knock 2%-3% off Apple's projected per-share earnings in 2026.

Apple shares have largely shrugged off the worries. Apple was one of the few major tech stocks to rise early Tuesday, and it is the only megacap tech to have notched gains over the last month. It is also the only one still sporting a market cap above $3 trillion. That has kept Apple's valuation multiple around 32 times projected earnings for this year-18% above its five-year average, according to FactSet data.

Why are Apple's shareholders so sanguine? The company itself has given no details about the expected impacts of tariffs. Chief Executive Tim Cook punted on the topic during Apple's earnings call in January.

Investors may hope the matter resolves itself sooner than later. Best Buy said Tuesday its fiscal-year forecast doesn't account for tariffs, with Chief Executive Corie Barry citing "uncertainty about the duration, timing, amount and countries involved," among other factors. Nonetheless, the consumer-electronics retailer expects a one-percentage point hit to its same-store sales if 10% tariffs on Chinese goods last a full year.

Barry also admitted to being in uncharted waters; "We've never seen this kind of breadth of tariffs," Barry said. Apple may be sailing into rougher seas than it has acknowledged.

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(END) Dow Jones Newswires

March 04, 2025 11:17 ET (16:17 GMT)

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