With shares trading just above a key support level, investors will be alert for clues about Apple’s manufacturing plans

Apple reports earnings after Thursday’s market close, and investors will be alert for updates about the company’s manufacturing plans.

Apple Inc. has been caught in the crossfire of a trade war, and heading into earnings, its stock now trades just above a key level.

Apple’s stock was trading near $207 on Wednesday morning, a few dollars over its critical threshold of $200 — a psychological point on the chart that traders and investors alike are paying attention to. Any negative news on the stock could push its price below the threshold, which could draw in traders and increase volatility.

That matters because earnings have the potential to move Apple’s stock significantly, and on Thursday afternoon, the company will be reporting its fiscal second-quarter results. Perhaps more important than the numbers will be any commentary from Apple on how it’s adjusting its manufacturing plans in response to tariffs.

U.S. Commerce Secretary Howard Lutnick has expressed a desire to see phones made domestically, but investors know that a full Apple manufacturing facility in the U.S. is not a viable solution, even if it would appease the Trump administration. That said, there are other ways Apple can move its production around.

J.P. Morgan analysts estimate that moving Apple’s assembly to the U.S. would increase costs by 30% — likely a costlier outcome than simply incurring tariffs. Therefore, one of the more favored solutions would be an expansion of assembly facilities in India, assuming that tariffs will be lower on that country than on China. Meanwhile, the company could placate the Trump administration by investing in initiatives to expand domestic component suppliers instead, J.P. Morgan noted.

About 15% of the smartphone maker’s production was done in India in 2024, which means an increase of 10% shouldn’t be much of a stretch, according to Zacks strategist Kevin Cook. If Apple is considering such a move, he’ll be listening to see whether that India expansion could cause a contraction in operating margins.  

Apple is also front-running $500 billion worth of investments for the next four years to develop semiconductors and artificial-intelligence servers in the U.S. Morningstar analyst William Kerwin believes the move is part of a plan to earn tariff exemptions on imports from China, where about 70% of iPhones are made.

But there’s one caveat to this, which is that investors thought Nvidia Corp. was taking a similar approach when it joined the Stargate joint venture that plans to invest $500 billion in domestic artificial-intelligence infrastructure. Instead, Nvidia was hit with new license restrictions on its H20 chip for the China market. One difference is that sales of Nvidia’s advanced chips to China have been viewed as a national security threat, unlike iPhones and other Apple products. That could be Apple’s saving grace. 

For now, Apple’s services segment is seeing steadier sales growth, noted Rob Swanke, an analyst at Commonwealth. Services revenue is expected to grow 12% this fiscal year. The segment made up 25% of Apple’s overall sales last fiscal year, and it could be an even bigger contributor with the rollout of Apple Intelligence, if users opt to pay for more cloud-storage space. However, Apple has delayed key aspects of Apple Intelligence, and Swanke will be listening for any material updates on that front.

Any progress on Apple Intelligence could help drive iPhone sales.

Apple at $200 is a key threshold

Apple’s stock is down by over 44% from its all-time high in December and is considered tremendously oversold on a technical basis, says Jay Woods, chief global strategist at Freedom Capital Markets. 

The stock’s key threshold price is $200, which acted as a resistance point throughout 2023. When it finally broke above this level in June 2024, that turned the resistance point into a support line, which was broken only briefly after President Donald Trump’s sweeping April 2 tariff announcement that sent stocks tumbling.

“I think the lows are in,” Woods said of Apple’s stock. “And now we listen to earnings and we continue to watch tariffs. But the initial shock of what could have been on the tariff front seems to be off the table for now.”

If Apple’s earnings call isn’t digested positively, Woods will be watching to see if the stock breaks below $200. If it does, the next key support level would be near $170, which is where the stock fell to in the week following Trump’s April 2 announcement.

Below is a chart for Apple from 2023 to date, with the central green line marking the $200 level. The yellow line marks the 200-day moving average and the purple line marks the 50-day moving average.

Photo: FactSet

Coincidently, on a fundamental basis, Morningstar’s fair value estimate for the stock also sits at $200. For the stock to deserve a higher target, Kerwin noted that there would need to be stronger growth assumptions for iPhone sales. 

Sales for fiscal 2025 are expected to come in at around $407 billion, up 4% from the previous year. Earnings per share are expected to come in at $7.26 for the fiscal year, up 7.5% from the previous year. But Zacks strategist Cook noted that Apple could be reaching “diminishing returns” on iPhone sales growth, which is expected to see negative growth for the year. iPhone sales made up 51% of Apple’s revenue in fiscal 2024.

The analyst consensus for Apple’s second-quarter earnings per share is $1.62 on $94.3 billion in sales. For its third quarter, the FactSet consensus is for $1.46 in EPS and $88.9 billion in sales.

Despite Apple’s stock already trading above its fair-value estimate, it could move higher on optimistic sentiment. Below is a chart from Morningstar, with orange zones representing price ranges where the stock entered “overvalued” territory and still saw steep returns, including around 2020, the year Apple’s stock returned almost 82%.

Photo: Morningstar

The average price target for Apple’s stock is $239, and 62% of analysts polled by FactSet have bullish ratings. Early in Wednesday’s action, the stock was trading near $207, implying the potential for 15% upside. Since the upside is tight, investors must keep in mind that the stock is relatively volatile at a beta of 1.46; measures above 1 signal higher volatility than the broad market.