Why Shares of Apple Are Sinking Today

Core Viewpoint - Apple shares declined approximately 4% following the earnings report, despite a generally positive market due to trade negotiations between the U.S. and China, with tariffs continuing to impact the company negatively [1][2]. Financial Performance - Apple reported earnings and revenue for the second fiscal quarter that exceeded Wall Street estimates, with iPhone revenue surpassing estimates by $1 billion [2]. - CEO Tim Cook indicated that tariffs are expected to add$900 million in expenses for the current quarter and projected low-to-mid-single-digit annualized revenue growth [3]. Analyst Sentiment - Following the earnings report, several analysts downgraded their ratings on Apple stock, with Jefferies analyst Edison Lee lowering the rating to underperform due to anticipated expanding tariff impacts [4]. - Rosenblatt Securities analyst Barton Crockett also downgraded Apple from buy to neutral, citing muted growth and the need for new products to stimulate growth in a challenging tariff environment [4]. Market Context - Despite a temporary rebound after a pause on tariffs, Apple trades at around 29 times forward earnings, slightly above its five-year average, with ongoing tariff uncertainties likely to persist [6]. - The long-term outlook for Apple remains positive, but the stock is not trading at a significant discount considering the near-term challenges it faces [7].