Shares of tech behemoths Apple and Amazon took a downturn in after-hours trading on Thursday, despite a broad rally in tech stocks earlier in the day. The late slump followed the release of their respective earnings reports, which, while in some aspects exceeding expectations, contained elements that appeared to worry investors.
Earlier in the trading session, the tech sector had experienced a significant boost, fueled by strong earnings reports from Microsoft and Meta Platforms. These results instilled confidence in the profitability of artificial intelligence investments, helping to offset concerns about the potential economic fallout from President Trump’s ongoing trade policies, particularly tariffs. The Nasdaq Composite, reflecting this optimism, closed the regular session with a substantial 1.5% gain.
However, the positive sentiment shifted after the closing bell as Apple and Amazon presented their financial results and forward-looking statements.
Apple’s Tariff Troubles and Services Miss
Apple’s stock slid by approximately 4% in after-hours trading. While the company’s overall revenue and earnings per share for the fiscal second quarter surpassed analysts’ forecasts, a closer look revealed some areas of concern. Notably, the revenue from Apple’s Services division fell slightly short of expectations, coming in at $26.65 billion against an anticipated $26.70 billion. This segment is closely watched by investors for its high margins and growth potential.
Adding to the negative sentiment, Apple CEO Tim Cook indicated that the company anticipates incurring around $900 million in additional costs in the current quarter due to tariffs, assuming current rates remain unchanged. Cook mentioned that Apple is adjusting its supply chain to mitigate the impact, including sourcing more products from India and Vietnam.
Despite these headwinds, Apple announced a substantial $100 billion stock buyback program and a 4% increase in its dividend, signaling confidence in the company’s long-term value.
Amazon’s Cloud Growth Slowdown and Cautious Outlook
Amazon’s shares also experienced a decline in after-hours trading, falling by about 2.5%. The e-commerce and cloud computing giant reported first-quarter revenue that beat expectations, reaching $155.7 billion, a 9% year-over-year increase. The performance of its cloud division, Amazon Web Services (AWS), also showed growth, with sales rising 17% to $29.3 billion.
However, investors appeared concerned by Amazon’s outlook for the second quarter. The company projected operating income to be between $13 billion and $17.5 billion, which fell below the consensus estimate of $17.64 billion. While Amazon did not explicitly quantify the impact of tariffs on its future earnings, the mention of “tariffs and trade policies” as factors contributing to uncertainty likely weighed on investor sentiment.
Broader Market Implications
The after-hours dip in Apple and Amazon shares highlights the continued sensitivity of the tech sector to macroeconomic factors, including trade tensions and their potential impact on supply chains and consumer demand. While strong earnings from some of the largest players initially boosted the market, cautious guidance and specific concerns, such as Apple’s tariff costs and Amazon’s cloud revenue growth, can quickly dampen enthusiasm.
