Apple Faces Tariff-Related ‘Sword of Damocles’ Ahead of Earnings

Apple will likely face tough questions on tariffs and AI from investors when it reports earnings this week.

That’s according to a report Tuesday (April 29) from Reuters, which says the tech giant’s investors will want to know more about the delayed launch of Apple’s artificial intelligence (AI) features, and the impact of the U.S.-China trade war on its business.

“Tariffs are a sword of Damocles for Apple — dangling, disruptive and politically charged,” said Eric Schiffer, chairman of Patriarch Organization, a California-based private equity outfit that holds shares in the iPhone maker.

According to Reuters, while Apple enjoyed a flurry of orders for the iPhone 16e before the tariffs were announced, Wall Street analysts are still projecting a drop in iPhone sales, the second such quarterly decline in a row.

Apple is reportedly planning to offset the tariffs by sourcing all its iPhones for the U.S. market from India, with plans to get all its U.S.-bound iPhones from that country by the end of 2026

The Reuters report notes that Apple has been slower than rivals Samsung and Google at introducing new AI features. Upgrades to its voice assistant Siri are on hold until next year, while Apple has pulled an ad campaign promoting AI features that were not yet available.

Apple has also faced AI hiccups in China, where it has been losing ground to domestic smartphone makers like Huawei. Earlier this year, Apple teamed with Alibaba to develop AI services for Chinese customers, but it’s not clear when they will debut.

Meanwhile, a recent research note from Morgan Stanley argued that consumers’ perception of Apple’s AI platform is more favorable than that of investors.

In the research note provided to PYMNTS, the investment bank said it found that the Apple Intelligence platform has been downloaded and engaged with by 80% of eligible American iPhone owners in the past six months, has an above average net promoter score of 53, and is marked by customers as “easy to use, innovative, and something that improves their user experience.”

“While much of the public critique of Apple Intelligence is warranted, and investor sentiment and expectations on Apple’s AI platform couldn’t be lower, our survey of iPhone owners paints a more positive picture,” Morgan Stanley said in the note.