Apple shares fell sharply in early trading, sliding 2.5%, as investors reacted to a combination of tariff-related cost warnings, a rare cut to the company’s stock buyback program, and concerns about demand in key markets.
The immediate catalyst for the decline was Apple CEO Tim Cook’s warning that the company faces a $900 million headwind from tariffs this quarter. These costs stem from escalating US-China trade tensions, with new tariffs threatening to squeeze Apple’s margins and potentially increase prices for its products if the company passes on the added expenses to consumers.
Cook indicated that while most Apple devices sold in the US this quarter will be assembled outside China, the company is still exposed to significant tariff risk, and further trade actions remain possible.
Adding to investor anxiety, Apple announced a $10 billion reduction in its stock buyback authorization-the first such cut in recent memory. Historically, Apple has maintained or increased its buyback program, so this move was interpreted as a sign that the company is prioritizing cash preservation amid economic uncertainty and rising costs.
While Apple narrowly beat quarterly revenue and earnings expectations, reporting $95.36 billion in sales and $1.65 per share in earnings, its forward guidance was cautious. The company projected low-to-mid single-digit revenue growth, in line with subdued analyst forecasts.
In China, a critical market for Apple, revenue came in slightly above expectations at $16 billion, but sales declined 2% year-over-year, reflecting intensifying competition from local brands like Huawei and slower adoption of new AI-driven features.
Analysts warn that continued tariff pressures could eventually force Apple to raise iPhone prices, potentially dampening demand in its largest markets. The company is accelerating its supply chain diversification, shifting more iPhone production to India and sourcing more chips from US facilities, but these transitions come with their own costs and risks.
In summary, Apple’s early share price drop is driven by a mix of tariff headwinds, a rare buyback reduction, and persistent concerns about demand and competition-especially in China.
If current losses hold, Apple could see more than $150 billion erased from its market capitalization, while rivals like Microsoft continue to gain ground as the world’s most valuable company.