Apple (AAPL) has faced significant challenges this year amid escalating trade tensions, driven by U.S. President Donald Trump’s aggressive tariff agenda. Investors have largely perceived Apple’s global supply chain as highly vulnerable. The situation intensified after Trump threatened to impose a 25% levy on iPhones not manufactured in the U.S.

However, one Wall Street firm is making a contrarian case: Loop Capital argues that rather than hurting Apple, the tariffs could actually be helping the company in the near term. Analyst Ananda Baruah highlighted in a recent note that Apple’s strategic response to tariff disruptions has effectively created a beneficial “demand bridge” leading into the anticipated launch of the iPhone 17.

In this article, we’ll break down Loop Capital’s contrarian thesis, delve into Apple’s financials, and highlight a key catalyst investors should watch going forward. With that, let’s take a closer look!

About Apple Stock

Founded in 1976, tech giant Apple (AAPL) has consistently set the benchmark in the technology sector. The company’s lineup includes flagship products like the iPhone, MacBook, Apple Watch, AirPods, and iMac — all integrated within the ecosystem of its highly profitable Services business. AAPL’s market cap currently stands at $3 trillion, making it the third-largest company in the world.

Shares of the iPhone maker have dropped 19.8% on a year-to-date basis, ranking it as the worst performer among the Magnificent Seven stocks in 2025. Analysts point out that the decline has been driven by a whirlwind of factors beyond the tech giant’s control, including the trade war — recently intensified by a direct tariff threat fromTrump. Concerns that the company has been slow to implement AI features on its widely used iPhones have added further pressure on the stock.

Loop Capital Suggests Tariffs May Ultimately Help Apple 

Many investors and analysts view Apple as one of the Big Tech firms most exposed to the tariff risks. Apple has already shifted its iPhone assembly from China to India following the announcement of Trump’s “Liberation Day” reciprocal tariffs, targeting 50% iPhone production there by 2026. Trump recently added another layer of uncertainty, threatening to impose a 25% tariff on iPhones manufactured outside the U.S. Still, as I noted in my previous article on AAPL, Trump’s threats are unlikely to come to fruition, given that relocating production to the U.S. would be an extremely lengthy and expensive process, potentially pushing iPhone prices beyond what many consumers can afford. Moreover, Trump’s trade war faced legal setbacks last week. While investors initially reacted with optimism, the ongoing court battles add further uncertainty to how the situation may ultimately unfold.

Meanwhile, one analyst is presenting the counterintuitive argument that Apple might actually benefit from the disruption. Last week, Loop Capital’s Ananda Baruah suggested that tariff-induced changes in production and pricing could bolster iPhone performance in the near term. The firm reiterated its “Hold” rating and a price target of $215 on Apple.

Specifically, the analyst noted that Apple’s strategy of pulling forward phone shipments into the March and June quarters, part of its broader “tariff actions,” provides “a much-needed bridge” ahead of the iPhone 17 launch. He also pointed out that the company has increased its iPhone 17 shipment forecast for the September and December quarters to 100 million units, up from 92 million previously. Baruah said that projected shipments for the new iPhone 17 Air model have increased by 15 million units to 31 million.

While tariffs may put pressure on margins, Loop Capital believes that “if Tariffs aren’t shockingly onerous investors could look through them if there is legitimate iPhone 17 and iPhone 18 form factor excitement.” The firm anticipates that both models will feature the most significant hardware design changes in years.

The analyst also highlighted that average selling prices are rising, with Apple expected to raise prices on the iPhone 17 Pro and Pro Max by $100 to $200. The prices of the upcoming iPhone 17 are expected to rise this fall, regardless of tariffs. The company is reportedly “determined” to prevent any perception that the price increases are linked to U.S. tariffs on Chinese-made products.

In addition, Loop pointed out Apple’s subtle move into the generative AI space. “Our work suggests that AAPL’s latest Siri kerfuffle may be compelling a bit of a strategy shift internally and that AAPL is in the process of placing orders for ~$1.0B of GB300 NVL72s,” according to the analyst note. Baruah added that the shift could signal Apple’s evolving AI strategy in response to recent challenges with Siri.

Overall, Loop Capital remains optimistic as the Cupertino-based behemoth navigates the tariff landscape and gears up for significant product launches.

Apple’s Financials

On May 1, Apple released its financial results for the fiscal second quarter of 2025. Overall, the headline numbers were solid, but the stock fell more than 3% following the report as the iPhone maker failed to alleviate investor concerns about key issues like rising tariff costs and weakening demand in China. Since I covered the company’s results in depth in my latest article, I’ll highlight the key points here.

The company’s total revenue rose 5% year-over-year to $95.4 billion, surpassing Wall Street’s consensus estimates by $840 million. AAPL’s GAAP EPS stood at $1.65, up 8% year-over-year and above expectations. Notably, more than two-thirds of the total revenue came from product sales, which grew 3% year-over-year, with iPhone sales increasing 2% year-over-year to $46.84 billion, driven by higher net sales of the Pro models. However, the primary driver of top-line growth was the Services segment, which set a new sales record with $26.6 billion in revenue for Q2, a 12% year-over-year increase, with growth reported across all geographic regions. The segment’s gross margin also expanded by 70 basis points quarter-over-quarter, reaching 75.7%. Given that Apple has over 1 billion paid subscriptions, this segment could provide some support to top-line growth in the coming quarters, especially as the outlook for other businesses remains uncertain due to tariff concerns.

What truly disappointed investors was the 2.3% year-over-year decline in Greater China sales to $16 billion in Q2, which came in below analysts’ expectations. One of the main factors behind Apple’s underperformance in China is its inability to launch AI features on iPhones in the country. The company is also contending with fierce market competition in China, particularly from Huawei. As a result, Apple has lost its leading position in the Chinese smartphone market and now ranks as the fifth most popular phone maker. Another factor that weighed on investors’ mood was, unsurprisingly, tariffs. CEO Tim Cook said during the earnings call that, if tariffs remain at their current levels, Apple’s costs would increase by roughly $900 million in the third quarter.

Looking ahead, management expects modest year-over-year revenue growth in the low to mid-single digits for Q3, translating to a revenue range of around $87 billion to $90 billion.

All Eyes on Apple’s WWDC

Apple will host its annual Worldwide Developers Conference on June 9, with analysts widely anticipating major announcements on AI advancements and improvements to its operating system designs. The Cupertino-based tech giant is expected to introduce a major redesign across its operating systems, inspired by VisionOS. Apple is also reportedly aiming to give the iPad a more Mac-like experience. In addition, the company is expected to grant third-party developers access to its AI models, enabling them to leverage the core technology behind the Apple Intelligence platform.

Other features expected this year include a live-translation mode for both AirPods and the Siri voice assistant, along with an eye-scrolling capability for the Vision Pro headset. In the AI space, Apple is reportedly developing health-related features and an AI-powered battery management mode.

AAPL Valuation and Analysts’ Estimates

Despite multiple downward revisions to Apple’s fiscal 2025 earnings and revenue consensus estimates due to ongoing tariff-related uncertainty, the iPhone maker is still projected to deliver modest growth this fiscal year. Analysts covering the company anticipate a 6.54% year-over-year increase in EPS to $7.19 for FY25, while revenue is expected to rise 4.12% year-over-year to $407.16 billion.

Priced at 27.93 times forward adjusted earnings, AAPL’s valuation appears reasonable. Notably, the multiple has further compressed over the past month. This leads me to believe that much of the negatives are already priced in, offering a solid margin of safety at current levels.

What Do Analysts Expect for AAPL Stock?

Despite the prevailing uncertainty, the majority of Wall Street analysts remain bullish on Apple. Out of the 37 analysts covering the stock, 18 recommend a “Strong Buy,” four label it a “Moderate Buy,” 12 advise holding, one rates it a “Moderate Sell,” and two give a “Strong Sell” rating — resulting in a consensus rating of “Moderate Buy.” The mean price target for AAPL stock is $231.02, which is 15% above Friday’s closing price.

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.