Apple Shares Surge After Tariff Exemption, But AI Headwinds Linger

Apple Inc. (NASDAQ:AAPL) shares jumped at the end of last week after U.S. Customs and Border Protection issued new guidance exempting smartphones and several other electronics from the latest round of reciprocal tariffs. This move has been described by KeyBanc analysts as “probably the best case scenario we can think of for AAPL.”

Key Developments

• Tariff Exemption Boost:

  • The U.S. granted an exception for smartphones from the recent tariff action, removing significant trade war risks from Apple's immediate outlook.

  • This unexpected carveout has shifted the market's base-case scenario, easing concerns after escalating trade tensions earlier.

• Analyst Upgrade:

  • KeyBanc upgraded Apple's rating from Underweight to Sector Weight.

  • Analyst Brandon Nispel noted that the exemption “takes a big risk off the table” and removed further downside for the stock.

• Valuation and Challenges:

  • Apple shares are now trading near valuation multiples of 18 times expected EV/EBITDA and 23 times price-to-free-cash-flow, aligning with a 10-year average.

  • Despite the positive tariff news, structural challenges remain:

    • High investor expectations for fiscal year 2026 growth.

    • Ongoing scrutiny over Apple's approach to artificial intelligence, with concerns raised over delays in Siri upgrades and limited AI service rollouts compared to its peers.

    • Additional legal risks linked to a Department of Justice lawsuit involving Google (NASDAQ:GOOGL) may impact the services segment.

Market Context

• Recent Rally:

  • The tariff exemption helped propel tech stocks higher after last week's market turmoil driven by the trade war narrative.

  • Compared to a week ago, when an escalating trade conflict was expected to weigh on all sectors, the new baseline now excludes the most meaningful risk from Apple's balance sheet.

• Structural Considerations:

  • While immediate downside has been removed by the tariff relief, Apple still faces long-term challenges.

  • The company's relative lag in its AI strategy compared to competitors continues to be a point of concern among investors.

Tracking Apple's Financial Health

For a deeper look into Apple's valuation metrics and financial ratios—which reflect its current trading multiples and performance trends—investors can consult the
🔗 Ratios TTM Statement Analysis API from Financial Modeling Prep.