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Apple is scheduled to report its fiscal quarter results for 2025 on Thursday, July 31, and Wall Street is closely watching the company balances the slower demand for iPhones, increasing tariff pressures and the need to outline a reliable artificial intelligence strategy. Despite the ongoing macro headwinds, Apple's services business remains a key profit driver, with speculation around a massive AI acquisition conspiracy before the call. The consensus expects modest revenue and EPS growth, but the bigger story is whether Apple can adequately clarify tariffs, demand trends, and AI investments.
The streets are looking for revenues at around $88.9 billion, about 3.7% year-on-year and about 1.4% EPS. Apple itself has led to low-digit revenue growth and total margin growth rates and total margins, including the expected impact on tariffs of $900 million. Analysts are typically clustered between $1.40 to $1.45 EPS, with some upside calls pointing to weaker US dollars offering resilient service revenue and small tailbones. Total margin implementation is a key indicator given both the higher input costs and the impact of shift demand.
The iPhone remains the highlight. UBS notes that iPhone sell-through fell 18%, 18% in June, two months before the quarter, as demand moved forward due to tariff horrors. This has led to an estimated June quarter unit of around 45 million units, increasing modestly year by year, but fading momentum sets a more challenging September quarter. City projected 45 million iPhone units in June, but only 50 million in September, citing softer than expected replacement demand, falling from the 52 million forecast. Morgan Stanley has estimated up to $4 billion in potential revenue lifts, looking at several benefits from China's promotions, but the risk is given a revival of Huawei's competition.
Beyond the iPhone, Service will once again be in a bright spot. The consensus expects service revenue to be around $27.5 billion. This represents double digit growth and could support margins that are far above the hardware business. Sensor Tower's UBS data shows the App Store revenue growth rate in June, supported by FX Tailwinds. With a 70% north service margin, the surprise here goes a long way in cushioning softer iPhone results. Investors want to hear the latest updates on Apple Intelligence subscriptions and the deployment of AI-driven features across the ecosystem.
Customs duties are wildcards. Apple estimates additional costs for the June quarter to be $900 million, with executives warning that the final impact is uncertain given the ongoing Section 232 trade investigation. Semiconductors and downstream products are now excluded from some mutual tariffs, but Apple continues to face a volatile policy environment. Citi noted that the market is too pleased with the risks of tariffs, suggesting even more downsides if enforcement expands. Goldman Sachs flags tariffs alongside Apple's advertising revenue risk. Updated commentary from CEO Tim Cook on tariff exposure is under extensive scrutiny.
Artificial intelligence is another focus. Apple has been rolling out Apple Intelligence features since WWDC 2025, including AI-powered tools for SIRI, messaging and photography. However, Needham warns that Apple is a year or two behind its competitors, and that it is likely that it will need to significantly increase CAPEX. Apple has weighed Siri's partnership with humanity or Openai, and Wedbush has floated the potential $30 billion acquisition of bewildered AI as a “easy” move to jump AI strategies. Investors are looking to see if Cook will remain willing to roll out Apple's vast cash reserves for a bold M&A move rather than a bold buyback.
Other stories are swirling too. The report suggests that JPMorgan Chase is approaching an agreement to take over Apple's credit card program from Goldman Sachs, potentially giving Apple a new financial services partner at scale. In terms of supply chains, Apple announced a $500 million partnership with MP Materials, building a US-based recycling facility for rare earth magnets, enhancing the domestic procurement narrative. Meanwhile, COO Jeff Williams is set to retire, while Sabi Khan will take over the business, and another leadership shift at a critical time.
Regulations are also increasingly looming. Reuters reported that Apple is likely to get EU approval for changes to the App Store in the coming weeks.
The evaluation and emotions towards revenue are mixed together. Apple's stock has been down nearly 10-15% since the start of the year, trading at about 28 times the forward revenue, a peer premium despite modest single-digit revenue growth. Bulls, including Goldman and Wedbush, look at resilient margins, service growth and potential AI catalysts as reasons to buy revenue. The Bears claim that Apple is vulnerable to any false attitude due to tariff risks, slower demand for iPhones, and delayed AI investments.
Ultimately, the June quarter appears to be set to bring about modest growth driven by the strength of service and the tailwinds of Forex, but the iPhone volume shows signs of strain after a tariff-related pull-in. Actual tests are management commentary on tariffs, AI investments, and positive demand, which can change sentiment rapidly. For now, Apple is a cash-rich giant navigating more complex landscapes, and Thursday's results are likely to determine whether investors are focusing on their short-term resilience or risks of long-term innovation.
