Improved sales in China is important. According to data compiled by Bloomberg, Apple earned around 17% of its 2024 revenue from the large China region in 2024, but about 26% in Europe and over 40% in the Americas.
This week it was demonstrated that China’s trends may have improved. This was demonstrated when Apple jumped on a very negative day for the market following reports that Apple began working with Alibaba Group Holding Ltd. to introduce AI capabilities to its products in China. I did. The Chinese company’s chairman confirmed the partnership on Thursday.
“We see this as a key catalyst for Apple’s competitive position in China,” Morgan Stanley analyst Eric Woodling wrote earlier this week. Citing a survey conducted by the company, he said that iPhone users in China are more interested in AI than their US and European counterparts, with over 50% saying that Apple Intelligence’s incredible developments “a major impact on decisions from moderates.” He said he gave it to me.” Upgrade to a new iPhone this cycle. ”
Also, improvements occur after a period of growth compared to large tech peers. According to Bloomberg Intelligence, Apple’s revenue has declined in five of the last nine quarters, with a 4.9% growth in 2025, which is less than half of the 11.6% pace across the tech sector .
Within this context, geopolitical tensions grow. The Trump administration imposed a 10% tariff on China, and the country retaliated with its own tariffs. China is also considering potential investigations into Apple’s policies and App Store fees.
Analysts are very underestimating the risk of tariffs, but are noted about uncertainties such as how long they have been in place, whether Apple will receive the exemption. Evercore ISI sees the impact described as “relatively minimal” in the “range of 3-4% of EPS”. Bank of America said the revenue impact must be “limited” and “manageable.”
Still, Apple’s rating suggests a limited space for errors. The stock trades with an estimated revenue of 31 times, and has surpassed the average by around 50% over the past decade. The stocks also trade at a wider market and premium across the technology sector.
Following multiple downgrades this year, more than 60% of analysts recommend buying stocks. This is far below the Megacups of Microsoft Corp., Nvidia Corp., Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc.
Still, investors continue to view Apple as a relatively defensive stock, given its strong cash flow, a massive buyback program, margin services business, and a large shortfall in AI.
“Apple is a bit of a problem in the short term given its lack of valuation and growth, but we won’t find a more impressive cash cow for the company,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services. It states. “There’s a reason it remains an institutional and retail favorite.”
