Tariffs, AI Delays Put Apple On The Hot Seat As iPhone Sales Slip Again: Report

While Apple saw a spike in orders for its budget-friendly iPhone 16e during the January–March quarter, analysts still foresee a small year-over-year decline in iPhone shipments.

So far, the Trump administration has kept electronics out of the crosshairs, but the prospect of new levies has already rattled Apple’s stock.

Source : Apple

Apple is bracing for a tense earnings call this week as investors zero in on two major concerns: the looming threat of US-China tariffs and the company's sluggish rollout of artificial intelligence features. As reported by Reuters, the Cupertino tech giant is widely expected to post a dip in iPhone sales for the second consecutive quarter, even as a cheaper model helped prop up demand in some markets.

Tariffs Cast a Shadow Over Cupertino

While Apple saw a spike in orders for its budget-friendly iPhone 16e during the January–March quarter, possibly spurred by buyers racing to beat possible price hikes, analysts still foresee a small year-over-year decline in iPhone shipments. That’s a worrying sign, especially since Washington is weighing new tariffs that could soon hit consumer electronics.

So far, the Trump administration has kept electronics out of the crosshairs, but the prospect of new levies has already rattled Apple’s stock. The iPhone maker, which relies on China for manufacturing nearly 90 per cent of its products, has seen its share price fall more than 16 per cent this year, shaving over $600 billion off its market value.

To blunt the tariff impact, Apple is reportedly looking to shift production of US-bound iPhones to India — a move that could ease some cost pressures. “Tariffs are a sword of Damocles for Apple – dangling, disruptive and politically charged,” said Eric Schiffer, chairman of private equity firm Patriarch Organization.

AI Innovation Stuck in Slow Gear

Meanwhile, Apple’s approach to AI has lagged behind rivals such as Google and Samsung. Key updates to Siri have been pushed back to 2026, leaving users and investors disappointed. A recent commercial touting new AI features was quietly pulled after it became clear the functionality wasn’t ready for prime time.

In China — a critical market where Apple is rapidly losing ground to homegrown brands like Huawei — the AI gap is proving costly. Although the company has inked a deal with Alibaba to roll out AI services, no timeline has been disclosed, deepening investor concerns.

Jacob Bourne, an analyst at eMarketer, summed it up: “With tariffs threatening cost structures, Apple faces pressure to move faster on AI innovation and supply chain realignment – both of which are capital intensive.”

Services and iPads Offer a Silver Lining

Despite the headwinds, Apple’s overall revenue for its fiscal second quarter is expected to climb 4.2 per cent, mirroring the previous quarter’s growth rate. That’s largely thanks to robust demand for iPads and a strong showing from its services division.

iPad sales are projected to jump 9.1 per cent, while services — Apple’s second-biggest revenue source after the iPhone — are likely to see an 11.8 per cent increase. Still, with iPhone sales under pressure and AI ambitions trailing the competition, Apple’s leadership will need to offer more than numbers to calm investor nerves.

The real test now? Whether Apple can convince Wall Street that it has a clear plan to navigate tariffs, catch up in the AI race, and reclaim lost ground in China.

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