"Investor enthusiasm is tempered by tariffs despite robust earnings reported by Amazon and Apple"
Tariffs Pose Challenges for Apple and Amazon Amid Strong Q2 Results
Tariffs imposed by President Donald Trump have added billions in costs for both Apple and Amazon in the second quarter of 2025, creating significant headwinds that have clouded their otherwise strong financial performances.
Apple reported a tariff-related cost of $800 million in Q2 2025 and expects this to rise to $1.1 billion in the current quarter. CEO Tim Cook has suggested that these tariffs could lead to higher iPhone prices. The company's stock price drop this year has cost the company its title as the world's most valuable company, with a loss of over €525bn in shareholder wealth.
Amazon, despite posting strong financial results, has also been affected by tariffs. The company's Q2 profit and sales were higher than the same period last year, but its shares fell more than 7% in pre-market trading due to lower operating income estimates for the current quarter. Amazon Web Services, its prominent cloud computing arm, reported 17.5% growth. However, the company faces tariff uncertainty affecting its operating income guidance, with CEO Andy Jassy highlighting concerns about absorbing costs and the impact on demand.
Dan Coatsworth, an investment analyst at AJ Bell, suspects that Amazon's past quarter sales might have benefited from suppliers stocking up on goods in the US before new tariffs came into power. Coatsworth is less optimistic about investors sharing Amazon's confidence in the resilience of their retail business due to ongoing uncertainty from Trump's tariffs.
The market is no longer betting on Big Tech as a whole, but only on those with a clear edge. Early indications suggest that Meta and Microsoft are fund manager favorites, with Nvidia close behind. Investors are becoming more selective in the tech market, favoring companies with a clear edge such as Meta, Microsoft, and Nvidia over Amazon, Apple, Google, and Tesla.
Coatsworth predicts that once stocks are run down, the next wave of goods could become more expensive if tariffs are passed onto the customer. He warns that this could lead to a tiered ranking system in the tech industry, with some companies more vulnerable to tariffs than others.
[1] Apple's Q2 2025 earnings report [2] Amazon's Q2 2025 earnings report [3] Coatsworth's analysis on the impact of tariffs on Apple and Amazon [4] Reuters article on the tariff-related costs for Apple and Amazon in Q2 2025
- In the face of rising tariffs, technology giants like Apple and Amazon are grappling with substantial financial implications, as evidenced by their Q2 2025 earnings reports.
- The escalating cost of tariffs in business sectors, like technology and general-news, is influencing investment strategies, with analysts like Dan Coatsworth predicting potential price increases for consumer goods in the future.
