Apple’s killer quarter buys more time for the company to deliver clarity on AI

Apple delivered a solid June quarter Thursday evening, and the stock moved higher. However, the lack of any real artificial intelligence strategy updates tempered investor enthusiasm. The stock remains an AI “show me” story — and in a market currently being powered by the AI trade, that’s all anyone really cares about. Revenue in Apple’s fiscal 2025 third quarter, which ended in June, rose 10% year over year to $94.04 billion, outpacing the $89.5 billion consensus estimate compiled by LSEG. It was the company’s biggest growth in quarterly revenue since December 2021. Earnings per share (EPS) increased 12% in the quarter to $1.57, better than the $1.43 consensus estimate, according to LSEG. The strong performance comes even as Apple saw a roughly $800 million drag due to tariff-related costs . That was $100 million less than Apple CEO Tim Cook had estimated back in May. On Thursday evening’s post-earnings call, Cook projected a $1.1 billion negative effect from tariffs in the September quarter, assuming no changes. Why we own it Apple’s dominant hardware and growing services businesses provide a deep competitive moat and plenty of bundling opportunities. Management’s net cash-neutral strategy provides confidence that free cash flow will continue to fund dividends and buybacks. Competitors: Samsung, Huawei, Xiaomi, OPPO, Dell , and HP Inc. Most recent buy : April 8, 2014 Initiation : Dec. 2, 2013 Bottom line Both sides of Apple’s business — products and services — saw June quarter revenue and gross income come in better than expected and higher year over year. Apple once again achieved a new all-time high for its installed base of active devices in all product categories and across all geographic regions. Services, meanwhile, set a new record with better-than-expected gross margin performance. Remember, a small miss on services revenue in the March quarter hit the stock pretty hard at the time. So, it was nice to see services turn. On the call, Cook said the company saw growth accelerate in the “vast majority of markets” that Apple tracks, including Greater China and many emerging markets. Moreover, he noted that the company set June quarter revenue records in over 24 countries and regions, “including the U.S., Canada, Latin America, Western Europe, the Middle East, India and South Asia.” Regarding China, it’s clear that the Chinese consumer still loves Apple, with iPhone sales accelerating sequentially to set a new record installed base. Mainland China set a June quarter record for iPhone upgrades, and according to consumer data tracking service Worldpanel, formerly Kantar, the iPhone held the top three spots in urban China. MacBook Air was the top-selling laptop in China during the June quarter, while the Mac Mini was the top-selling desktop there. Cook also touched on AI, reaffirming his view that it is “one of the most profound technologies of our lifetime.” He added that Apple Intelligence is being integrated across the company’s various platforms, and the company is “significantly growing” its investments in the technology. There, unfortunately, was not much of an update beyond what we already know. However, Cook said the team continues to make progress on a more personalized Siri, with plans for a launch of the updated personal assistant sometime next year. He also said, “We’re open to M & A that accelerates our roadmap.” That statement did not directly address reports back in June that Apple held internal discussions about whether to make an offer to buy AI startup Perplexity. But Cook saying that Apple is open to bringing in help is a welcome sign. AAPL YTD mountain Apple YTD Given the strength of the report and what appears to be a better-than-expected outlook for the current September quarter, it was no surprise to see the stock trading more than 2% higher in the after-hours session. That said, it’s a relatively muted move, given the positive results and the stock’s year-to-date decline of 17% as of Thursday’s close. The S & P 500 has gained nearly 8% in 2025. In our view, this is likely a reflection of investors being hesitant to get more optimistic on the stock until we get more clarity on Apple’s AI initiatives. While we fully understand that view, we too want more clarity on the road map for Apple Intelligence and would love to one day wake up to news that Apple has struck a deal to acquire Perplexity, results like this are a reminder of why investors should stick with Apple though times like this, even if it’s not yet time to recommend the stock as a buy. Apple is rarely the first to adopt new tech, choosing instead to take its time, see what’s out there and how consumers are responding, and then release a more refined version. Should that be the case again this time, and Apple does…