Apple (AAPL) stock slid Friday despite the iPhone maker’s better-than-expected June-quarter results, showing that it’s still in the investor doghouse.
The Cupertino, Calif.-based company late Thursday said it earned $1.57 a share on sales of $94.04 billion in the fiscal third quarter ended June 28. Analysts polled by FactSet had expected earnings of $1.43 a share on sales of $89.35 billion. On a year-over-year basis, Apple earnings rose 12% while sales climbed 10%.
For the current quarter, Apple expects its total revenue to increase by a mid- to high-single-digit percentage year over year. Analysts had been modeling for sales to rise 2.8% to $97.6 billion in the fiscal fourth quarter.
Apple’s iPhone sales were surprisingly strong, rising 13% to $44.6 billion in fiscal Q3. The company cited smartphone subsidies in China and tariff-related pull-forwards of demand in the U.S. for some of the outperformance.
Apple also saw strong growth in services and Mac computer sales in the period.
In morning trades on the stock market today, Apple stock fell more than 1% to 205.22, as the broader market retreated on the latest tariff news. It is down about 17% for the year and is dwelling in a “death cross” chart pattern.
Apple Stock Gets Price-Target Hikes
Still, at least nine Wall Street analysts raised their price targets on Apple stock after the Q3 report. But four of those analysts have neutral or sell ratings on Apple.
“Despite the beat and slightly higher September-quarter guidance than we estimated, we remain concerned on second-half (2025) momentum, given lack of exciting iPhone cycle and AI differentiation,” Barclays analyst Tim Long said in a client note.
Other concerns include potential smartphone market share loss in China from new Huawei handsets and folding-screen devices. Plus, Apple faces the possible loss of traffic acquisition cost, or TAC, payments from Google as the default search engine on the iPhone.
In addition, Apple has faced delays in rolling out new artificial intelligence features, such as an upgraded Siri digital assistant.
Long reiterated his underweight, or sell, rating on Apple stock but raised his price target to 180 from 173.
Ramping Up AI Investments
JPMorgan analyst Samik Chatterjee was more upbeat in his assessment. He maintained his overweight, or buy, rating on Apple stock and upped his price target to 255 from 250.
“Apple surprised investors with results that defied seasonal trends and marked a significant acceleration in total company revenue growth, iPhone revenue growth as well as Mac revenue growth,” Chatterjee said in a client note.
Apple also took “a more aggressive tone relative to ramp of investments and reallocation of resources towards AI,” he said. The company is raising its capital expenditures and making acquisitions to bolster its positioning in the AI megatrend.
On a conference call with analysts, Apple Chief Executive Tim Cook said the company has acquired seven companies this year, not just AI-oriented ones.
“We’re very open to M&A that accelerates our road map,” Cook said. “We are not stuck on a certain size company, although the ones that we have acquired thus far this year are small in nature. But we basically ask ourselves whether a company can help us accelerate our road map. If they do, then we’re interested.”
In recent months, some media reports have speculated that Apple could make a play for AI search engine Perplexity. In its most recent funding round, Perplexity was valued at $18 billion.
‘Patience Is Wearing Thin’
Wedbush Securities analyst Daniel Ives said Apple’s efforts in AI to date have not moved the needle much and “patience is wearing thin” among investors.
Ives believes Apple’s internal development efforts on AI are not doing the job and the company needs to make a significant acquisition, such as Perplexity
“The AI Revolution is the biggest technology trend in 40 years and right now Apple is watching this from a park bench drinking lemonade while every other Big Tech company is racing ahead like F1 drivers building out its AI strategy and monetization plan,” Ives said in a client note. “The status quo is clearly not working” at Apple.
Ives rates Apple stock as outperform with a price target of 270.
Jefferies analyst Edison Lee said Apple’s outlook is clouded by uncertainties.
“It is hard to get excited about Apple at the current stock price,” Lee said in a client note. He maintained his hold rating on Apple stock with a price target of 190.67.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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