Apple Growth Rebounds as Tariffs Loom: T. Rowe Price

Key Takeaways

What do you think in terms of Apple's seeming resilience and growth in China? >> Yeah, I think that their, you know, product is still in demand. I think they did some uh pricing adjustments to make it more attractive to fit under the subsidies. And at the end of the day, I think it's still a really high quality product and brand. I think that what matters going forward is their product innovation around AI and and improving Siri. Um, you know, I think that that you had a period where Huawei came back and took share back and it was a competitive environment made Apple kind of adjust a little bit to bring more value, but I think it's encouraging that uh things are getting better in China um and they're growing again. >> Tony, I I want you to help me with the math here a little bit. So April largely one percentage point of growth in the June quarter was pull pull forward from tariffs and then Apple told us that they would grow mid to high single digits in the September quarter. That would indicate that there isn't some kind of tariff front running here that Apple's just growing because it's growing. Do you buy that? >> Yeah. Well, I think that um you know it's kind of hard to tell to be honest. I I think that there was a period when people were rushing to Apple stores to buy some iPhones before the terrorists. But I feel like that quickly subsided and uh you know that was resolved relatively um in short order and so I think that what matters here is the forward look um you know as investors you're probably looking more towards what they do with the next iPhone cycle foldable um and in addition like services were was really strong and so there was a fear that you know what happens with uh you know Google search as well as kind of the the app store ruling uh where people circumventing the app store and it seems like that's like actually been okay and so uh going forward I think that it's less about like was there a little pull in or not probably more the iPhone cycle coming coming up that people aren't focused on. >> So Tony when does the real pivot point come when is it that you have confidence to add exposure and feel that Tim Cook and the team are on top of generative AI of the opportunity at hand of innovation. Look, I think Tim Cook and the team, they're really talented. Um, and they are worldclass manufacturers and you know, their product leadership, uh, you know, they built that over decades. And so, I don't think you can count them out. Um, in terms of where the stock at has been, it's it's lagged the market pretty considerably in a market that's been super beta fueled and risk-taking. And so, um, you know, if the market turns, like Apple, I think, is a safe haven. And then if you look at kind of the momentum they're building like things things are probably going to get better over the next 12 months. Um and I do think that you know they can do a lot within AI. Um they're probably you know not rushing to to commit to any one one uh partner. You know they own the ecosystem. And so to me like as long as the iPhone is still the main uh you know channel for AI I think that's that's really important. talent wasn't mentioned on the call, but the final question was about M&A in the context of AI. And what Tim Cook said, and I know cuz I put it in the top live blog and then I screenshotted it. We are very open to M&A, Tim Cook, 2:57 p.m. Pacific time, Thursday, July 1st. Is that a starter gun or signal particularly to investment bankers or do you expect Apple to stay sort of muted and disciplined on that front? I think Apple's very muted and I wouldn't say muted but they're very disciplined and um I think that they have like a very very uh strong focus in what matters and their direction. I mean for a long period of time you could put all their products on one table um and to make be really great at what they do. And so I I I don't think they're going to be muted. I think they're going to be disciplined and focused. Um, and they have made acquisitions that can really, I think, plug into the ecosystem, enhance their talent. I don't think they're going to go do a really big splashy um, acquisition, but if you take a step back, they're generating a ton of capital, and there's a lot of potential for for improvement in uh, via M&A.