Recently, Apple is not precisely considered as the apple of Wall Street’s eye this year, if we refer to its status since the start of 2025. The tech titan has suddenly found itself caught in a geopolitical crossfire where tariffs fly faster than software updates and production schedules get reshuffled like playlists. Over the year, shares dropped by 20% as tensions between the major global economies rose and the Trump administration slapped massive reciprocal tariffs of up to 125% on imports from China, where most of the company’s manufacturing bases were located. Investor concerns almost immediately piled up over how these duties would affect the iPhone maker in terms of the supply chain and pricing.

The sell-off accelerated, as Apple struggled to reposition iPhone shipments from India to the U.S before the tariff deadline. Meanwhile, the agitation regarding the 26% U.S tariff on Indian imports was highlighted by its recent temporary pause for 90 days. According to Evercore ISI, 80% of Apple’s production capacity lies in China. As per Morgan Stanley, if more than 80% of Apple’s manufacturing activities are still in China, even if it managed to shift the majority of its production to India, the iPhone revenue may suffer a hit of $7–8 billion.

Temporary Relief

The recent decision to exempt smartphones, computers, and key electronics like displays and processors from the latest round of tariffs provides Apple with a rare moment of temporary relief. While Vietnam, Thailand, and Malaysia (home to Apple’s iPad, MacBook, and wearables production) would also have fallen under the tariff target, the pause is now giving Apple some breathing room for a supply chain that is highly globalized.

It seems like this relief may be short-lived. With the company’s production footprint in the U.S being insignificant, a reversal of tariff exemptions would put further pressures on pricing and margins. Inability to transfer costs to customers, especially given aggressive pricing from Samsung and Chinese OEMs, could dent revenues and may hurt Apple’s bottom line at a time when it must regain, not lose ground.

Slow iPhone Sales Adding to the Pressure

Adding to the problems that Apple already has, it is the fact that the company is now rolling out AI-powered features slower than its competitors across its entire product line, particularly the iPhone. Rivals have been very aggressive in promoting their generative AI capabilities, as Apple’s AI integration seems to be in the midst of a gradual ramp-up. A 1% decrease in iPhone shipments in 2024, as reported by market research firm IDC, reflected dull demand ahead of this year’s geopolitical troubles.

With that, analysts reduced the earnings forecasts for Apple. The tech company now expects its earnings to rise by 7% in the current financial year, then 11% in the next, a consideration that is positive but definitely, unimpressive against the stock trading at 31 times earnings. On the other hand, the Nasdaq-100 Index, trades at a slightly lower 28 times multiple, indicating that Apple is relatively overvalued in this very challenging environment.

Strategic Actions & Patience

Apple appears to be on the move, announcing a $500 billion plan to increase U.S manufacturing over the next four years. Nevertheless, with such a complex global supply chain, repositioning would evidently take time. Meanwhile, Apple will remain susceptible to disruptions presented by trade and policy shifts.

Increasing manufacturing in India seems optimistic, but with 10-15% of iPhones being manufactured there, this really isn’t a fix. Other attractive locations could be used, like Vietnam and Malaysia, but again they’re also under the cloud of uncertain tariffs.

Strategizing Smartly

Apple’s long-term prospects will still depend on AI innovations and a possible future shift in global manufacturing strategies. For an intermediate analysis, it is looking a little darker. The halt of tariffs is a good thing, but it is not the end of the situation. Earnings growth has been tepid, valuation is stretched, and geopolitical risks are alarmingly high. Analyzing the stock and awaiting a better entry point may be wiser right now. If the administration eases tariffs further, the stock may well show serious rebound prospects. AI is about to reinvent consumer tech, Apple may still one day become a big winner, there’s just nothing in it to offer right now.