The services segment, encompassing Apple Music, iCloud, and Apple TV+, set a revenue record in the Apple Q2 2025 earnings, growing 11.6% to achieve double-digit gains. Cook emphasized, “Services are a cornerstone of our ecosystem,” noting over 1 billion paid subscriptions. The company’s gross margin climbed to 47.1% from 46.6%, driven by cost efficiencies and a strong services mix. Operating cash flow hit $24 billion, supporting $29 billion in shareholder returns via dividends and a new $100 billion share repurchase program.
Product Highlights: iPad Leads, iPhone Holds Steady
The iPad category shone in the Apple Q2 2025 earnings, with revenue up 15.2%, spurred by the M3 iPad Air and 11th-generation iPad. Over half of iPad buyers were first-timers, reflecting strong market appeal. iPhone revenue grew 2% to $46.8 billion, with the iPhone 16 and 16 Pro, powered by Apple’s in-house modem, performing solidly. Mac revenue increased 6.6% to $7.9 billion, boosted by M4-powered Macs like the MacBook Pro and iMac. Wearables, including Apple Watch and AirPods, fell 4.9%, impacted by a tough comparison with last year’s Vision Pro launch.
Tariff Costs Cloud Outlook
Cook addressed tariff challenges during the Apple Q2 2025 earnings call, projecting a $900 million cost increase for the June quarter if current and proposed levies persist. “Most iPhones sold in the U.S. this June will come from India,” he said, highlighting a pivot to manufacturing in India and Vietnam to counter tariffs. While Cook expressed confidence in Apple’s supply chain flexibility, analysts sought more details on the tariff calculations, reflecting investor concerns.
China Sales Decline
The Apple Q2 2025 earnings reported an 11% sales drop in China, contributing to investor caution. Cook attributed some of the decline to reduced channel inventory but remained bullish on growth, announcing four new retail stores in India this year. Despite the China dip, Apple set revenue records in markets like the UK, Spain, Brazil, India, and the Philippines.
App Store Legal Headwinds
Cook briefly touched on legal challenges in the Apple Q2 2025 earnings call, addressing a U.S. court ruling mandating third-party payment links in the App Store. “We disagree with the decision, have complied, and will appeal,” he said, noting uncertainty about the services business impact. The case, linked to Epic Games, underscores ongoing scrutiny of Apple’s App Store policies.
Future Investments and Product Pipeline
Apple’s active device base hit a record 2.35 billion globally, as noted in the Apple Q2 2025 earnings. The company plans to invest $500 billion in the U.S. over four years, including a Texas server manufacturing facility opening in 2025. Despite tariff and China challenges, services growth and a loyal customer base provide stability. The mid-2025 launch of AirPods Pro 3 and AirTag 2 is expected to strengthen the wearables segment.
Apple’s navigation of tariffs, legal issues, and regional sales challenges will shape its trajectory in 2025. For now, the Apple Q2 2025 earnings underscore resilience driven by services and product innovation.
