MW Apple's stock is in a slump. Can anything from earnings help change the mood?

By Britney Nguyen and Emily Bary

Whether Apple can say enough on AI or tariffs to settle some burning issues remains an open question heading into Thursday's earnings report

Apple Inc.'s stock is down about 16% so far this year, suggesting investors aren't too happy with the company as it heads into its June-quarter earnings report.

The iPhone maker $(AAPL)$ is set to report fiscal third-quarter earnings after the market closes on Thursday, and Wall Street could be as focused on the messaging as it is on the numbers. Apple's product businesses, on the whole, are expected to see just 2% revenue growth in the quarter, inviting questions about the company's overall innovation and its ability to use artificial intelligence as a selling point for device upgrades.

With ongoing uncertainty around tariffs, the U.S. Justice Department's investigation into its relationship with Alphabet Inc.'s $(GOOG.UK)$ $(GOOGL)$ Google and the company's slow rollout of AI features, investors are feeling "fairly negative" going into Apple's earnings report, Bank of America analysts said in a note to clients on Monday.

TD Cowen analysts agreed that sentiment toward Apple's stock is "relatively negative given its insufficient AI offerings in thefast evolving space, sensitivity to tariffs and unfavorable regulatory climate."

Read: Should Apple replace Tim Cook as CEO? These analysts are calling for dramatic change.

But they recommend investors show Apple some patience. "The incomplete AI strategy is still the biggest overhang, but we think [Apple] still has approx. 1.5 years to effect a compelling solution," the TD Cowen team wrote.

As for the upcoming earnings, they expect that Apple will meet expectations with its June-quarter results, bucking a "muted" macroeconomic environment and reaping some benefits from "demand pull-in," or the idea that consumers may have been motivated to buy up products early to get ahead of potential tariff moves.

The consensus view is for revenue of $89.2 billion and earnings of $1.43 per share, according to FactSet.

Investors will also be focused on Apple's gross margins for the quarter, which will reflect $900 million in costs from tariffs, the BofA analysts said. Apple previously said to expect gross margins of between 45.5% and 46.5% for the June quarter.

Eyes will also be on the company's gross-margin guidance for the September quarter, which Bank of America is modeling as "the trough." The analysts expect "subsequent [gross margin] improvement driven by better mix" of products with higher average selling prices, such as a slim version of the iPhone that is expected to launch this fall.

But the "risk on gross-margin guide creates a tough setup" heading into the report, they added.

The Bank of America team is expecting Apple to report revenue in line with or slightly above Wall Street's expectations on improving iPhone sales in China and strength in its services sector.

Hendi Susanto, a portfolio manager at Gabelli Funds, said in comments shared with MarketWatch that Apple has "both vulnerabilities and strong capabilities in managing the impact of [tariffs]. The Gabelli team "would not undermine Apple's global supply-chain management capabilities [in spite] of concerns on potential new tariffs," he added.

Whether Apple's earnings call answers investors' burning questions on tariffs remains to be seen. HBSC analysts wrote recently that they "doubt that management can say much given the ongoing negotiations between China and the U.S." The company might at least provide an estimated cost impact for this quarter that makes assumptions based on the current tariff situation, they said.

Don't miss: More Big Tech names report this week amid AI spending spree. Wall Street still wants some to leave their 'comfort zone.'

-Britney Nguyen -Emily Bary

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July 30, 2025 10:16 ET (14:16 GMT)

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