Apple's Earnings Exceeded Expectations, but Investors Still Wanted More. Here’s How Analysts Reacted

Apple recently posted fiscal second-quarter earnings that came in slightly above Wall Street expectations, yet investor sentiment remained mixed due to the company’s cautious outlook and ongoing concerns about tariffs. Despite these headwinds, most analysts continue to maintain a positive long-term stance on the iPhone maker.

‍

For the quarter, Apple reported earnings of $1.65 per share on $95.4 billion in revenue, surpassing analyst forecasts of $1.63 per share and $94.66 billion in revenue, according to data from LSEG. While this beat was modest, it still marked a solid performance in a challenging environment.

‍

However, one area of disappointment was Apple’s Services segment, which generated $26.65 billion in revenue—slightly below the $26.70 billion analysts were expecting, per StreetAccount. Still, the Services division, which includes platforms like iCloud, Apple TV+, and Apple Music, recorded an 11.65% increase from the previous year.

‍

Apple CEO Tim Cook commented that the company experienced “limited impact” from tariffs during the March quarter, thanks to supply chain improvements. However, he warned that tariffs could add approximately $900 million in costs for the current quarter. Despite these additional expenses, Cook expressed confidence in Apple’s strategic direction moving forward.

‍

Even with the earnings beat, Apple shares dropped nearly 3% during early trading Friday morning, reflecting concerns around the forward outlook. While some analysts lowered their price targets and two firms downgraded the stock, the majority of Wall Street remained supportive of Apple’s fundamentals and long-term potential.

‍

Jefferies downgraded Apple’s stock to underperform from hold, with a target price of $170.62—about 20% lower than the current share price. The firm expressed concerns that tariff impacts could increase over time and further pressure Apple’s earnings.

‍

Barclays maintained an underweight rating with a $173 price target, citing continued worries over weaker demand in China, potential regulatory risks tied to Apple’s Services business, and a delayed Siri update which could limit near-term demand for Apple Intelligence features.

‍

UBS kept a neutral rating and $210 price target. The firm noted that strong iPhone shipments in the March quarter—likely pulled forward to avoid tariffs—could depress unit sales in the second half of the fiscal year.

‍

Rosenblatt downgraded Apple from buy to neutral, lowering its price target from $263 to $217. The analyst team emphasized that for Apple stock to perform meaningfully better, the company would need a significant AI-driven surge in iPhone sales—an outcome they see as increasingly unlikely without a compelling new product launch.

‍

Morgan Stanley, on the other hand, reiterated its overweight rating and maintained a price target of $235, representing about 10% potential upside. The firm pointed out that Apple’s ability to limit June-quarter tariff exposure to $900 million—despite heavy reliance on China—demonstrates the effectiveness of its production shift to Southeast Asia. Still, the lack of guidance on key segments like Services and ambiguity around future supply chain distribution leaves open questions for the second half of the year.

‍

Bank of America echoed a similar sentiment, holding an overweight stance but trimming its target to $235 from $240. The firm acknowledged some margin pressure in the months ahead but emphasized Apple’s strong capital return policies, including increased dividends and expanded share buybacks, as key positives.

‍

JPMorgan maintained its overweight rating while cutting its price target slightly to $240 from $245. Analyst Samik Chatterjee called the company’s guidance for the June quarter “better than feared” considering the difficult macroeconomic landscape and tariff challenges.

‍

Citi also reiterated a buy rating and reduced its target from $245 to $240. The firm emphasized that Apple’s core fundamentals remain strong, even amid the uncertainties of a volatile trade environment.

‍

Evercore ISI continued to rate Apple as outperform, with a $250 price target, around 17% higher than the current share price. Analyst Amit Daryanani highlighted the company’s solid performance under tough conditions and expressed optimism about potential tailwinds later this year, particularly from the anticipated iPhone 17 launch and improved clarity around trade policy.

‍

Goldman Sachs also maintained a buy rating and set its price target at $253, which implies a 19% upside. While they acknowledged earnings-per-share were boosted by Services, the firm trimmed product margin forecasts due to expected tariff impacts.

‍

In summary, Apple’s recent earnings reinforced its resilience in a tough global environment, but uncertainty around tariffs, regulatory challenges, and delayed AI-related product updates are clouding the near-term outlook. While some analysts are more cautious, the majority still see Apple as a fundamentally strong company with long-term growth opportunities ahead.

‍