Tech Giants Navigate Tariff Headwinds: Q1 Earnings Roundup
Apple, Amazon, and Nvidia Face New Market Realities Amid Trump Tariffs
As Q1 earnings season unfolds, America's tech giants are revealing how they're adapting to a challenging economic landscape marked by President Trump's sweeping tariffs. While the sector shows resilience overall, each company faces unique hurdles in this new environment.
Apple: Supply Chain Optimization Limits Tariff Impact
Apple reported strong second fiscal-quarter earnings that beat Wall Street expectations, with EPS of $1.65 (vs. $1.63 estimated) and revenue of $95.4 billion (vs. $94.66 billion estimated). However, the company's Services division slightly missed estimates, contributing to a 4% drop in shares during extended trading.
CEO Tim Cook addressed tariff concerns during the earnings call, noting the company saw "limited impact" in the March quarter thanks to supply chain optimization. Looking ahead, Apple expects revenue to grow "low to mid-single digits" annually during the current quarter, with tariffs adding approximately $900 million to costs.
Cook revealed that Apple is already sourcing about half of its iPhones for the U.S. market from India, with most other U.S.-bound products coming from Vietnam, where tariffs are lower than from China. The company continues to manufacture the "vast majority" of products for other countries in China.
Amazon: Navigating Tariff Uncertainty While Building Profit
Amazon reported better-than-expected first-quarter results with EPS of $1.59 (vs. $1.36 expected) and revenue of $155.67 billion (vs. $155.04 billion expected). However, the company provided softer guidance for Q2, expecting operating income between $13 billion and $17.5 billion, below the consensus forecast of $17.64 billion.
In a notable shift from previous quarters, Amazon explicitly listed "tariffs and trade policies" among factors that could impact future guidance. CEO Andy Jassy acknowledged the challenge during the investor call, stating, "It's hard to tell what's going to happen with tariffs right now. It's hard to tell where they're going to settle and when they're going to settle."
Despite these headwinds, Jassy expressed confidence that Amazon could emerge stronger from the uncertain tariff environment given its ability to offer low prices, comparing the situation to how shoppers flocked to Amazon during the COVID pandemic.
AWS: Cloud Growth Slows But Margins Expand
Amazon Web Services, the company's cloud computing division, reported its third consecutive quarter of revenue misses, with 17% growth to $29.27 billion against expectations of $29.42 billion. This represents a slowdown from the previous quarter's 18.9% growth rate.
Despite the slower growth, AWS delivered impressive profitability with operating income of $11.55 billion and an operating margin of 39.5% – the widest it has been since at least 2014. The company continues to invest heavily in its AI infrastructure, with Jassy noting that AWS's AI business now generates "billions in annualized revenue."
Capital expenditures increased dramatically, rising approximately 74% year-over-year to $24.3 billion as Amazon prepares to meet growing demand for AI capabilities.
Nvidia: Compensating the Architect of AI Dominance
As tech companies race to build AI infrastructure, Nvidia continues to benefit from its market-leading position in GPUs that power the most advanced AI systems. The company's success has translated to its first compensation increase for CEO Jensen Huang in a decade.
Huang's base salary rose 49% to $1.5 million, with variable cash increasing by $1 million and stock awards growing to $38.8 million, bringing his total compensation to $49.9 million. This adjustment comes as Nvidia's revenue surged 114% to $130.5 billion in fiscal 2025, cementing its position as one of the world's most valuable companies.
THE XII
I review The XII as of May 1st market close.
Live Loud!
Trent