ii view: Apple details highest sales growth in recent years

Third-quarter results to 28 June

• Revenue up 10% to $94 billion (£71 billion)
• Adjusted earnings up 12% to $1.57 per share
• Dividend of $0.26 per share, unchanged from Q2

Chief Executive Tim Cook commented:  “At the World Wide Developer’s Conference (WWDC) 2025, we were excited to introduce a beautiful new software design that extends across all our platforms, and we announced even more great Apple Intelligence features.”

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ii round-up:

Apple Inc (NASDAQ:AAPL) detailed its highest sales growth since late 2021, with the maker of iPhones also offering outlook reassurance in the face of imposed US trade tariffs by President Donald Trump. 

Revenues for the three months to the 28 June rose 10% to $94 billion from a year ago, a new third-quarter record, pushing earnings up 12% to $1.57 per share. Wall Street had been expecting $89.5 billion and $1.43 per share respectively. 

Sales for the current fourth quarter are expected to grow by a mid-to-high single digit percentage amount, with the gross profit margin holding at around the current 46.5% level. 

Shares in the Dow Jones and Nasdaq company rose 2% in post-results trading having come into these latest numbers down by close to a fifth so far in 2025. The tech-heavy Nasdaq composite index is up almost 10% year-to-date, with the Dow Index up nearly 4%. Rival mobile phone software maker and owner of Google Alphabet Inc Class A (NASDAQ:GOOGL) is up 1%.

Sales of Apple’s core iPhone product rose to $44.6 billion, up from $39.3 billion in Q3 2024. Analysts had been expecting sales of $40.2 billion. 

Service revenues, its second-biggest category and including subscriptions to Apple Music, climbed to $27.4 billion from $24.2 billion a year ago.  

Geographically, sales improved across all regions including those for Greater China. A quarterly dividend of $0.26 per share is unchanged from the prior second quarter. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results, upping its estimated fair value target price to $240 per share from a previous $235.

ii view:

Started in 1976, Apple today employs over 160,000 people. Headquartered in Cupertino, California, it came to the stock market in 1980. The group’s devices and services compete against many rivals including Samsung, Meta Platforms Inc Class A (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN)-owned Prime TV, as well as others such as Spotify Technology SA (NYSE:SPOT), Netflix Inc (NASDAQ:NFLX), and The Walt Disney Co (NYSE:DIS). US sales were Apple’s biggest during the last financial year at 36%, followed by Europe 26%, Greater China 17%, the rest of Asia at almost 8%, Japan 6% and the Americas 6%. 

For investors, uncertainty regarding US and other countries’ potential retaliatory trade tariffs and how they might impact financial performance going forwards, persists. High trade tariffs could push inflation higher, raising interest rates and making consumers more reluctant to spend. An estimated Price Earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while consumer concerns for raised product prices under new trade tariffs may have brought some future demand forward. 

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On the upside, product innovation now includes the rollout of AI-based intelligence features. The tie-in of customers using its services on their Apple devices generates high customer loyalty. Product and geographical diversity exist, including exposure to payment services, while the dividend, although not a core attraction, has been increased consecutively for over 10 years, with the shares on a yield of around 0.5%.

In all, and despite ongoing risks, this well-managed tech titan looks to remain worthy of its place in many diversified investor portfolios. 

Positives:

• Diverse geographical markets
• Strong customer loyalty

Negatives:

• Dependency on iPhone sales
• Currency headwinds

The average rating of stock market analysts:

Buy