Hi YXI friends,

Maybe tariffs are pro-growth after all. People rushed to buy more iPhones last quarter, which gave Apple a bit more life to its business narrative after many dull quarters.

There were also some new signs of warmth in China, with strong sales in Emerging Markets. Apple is traditionally a “luxury” brand in consumer technology, and could be used to radiate status in developing countries as people gain wealth.

The big question is whether much of the sales growth is just “pull forward” demand due to tariff uncertainties, or Apple products have just become cool again.

Table of Contents

• 1. Business Highlights

• 2. Profitability

• 4. Valuation

• 5. Technical analysis

• 6. Machine Learning

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Business Highlights

Revenue Acceleration

Apple’s Q3 (Q/E June 2025) saw a positive surprise in its revenue growth, as it accelerated to 10% YoY. This was driven by robust iPhone and Mac sales, which we will break down below.

For Q4 (Q/E September 30), Apple guides mid-to-high single-digit revenue growth.

Apple Products

iPhone is the dominant product of Apple, accounting for 47% of last quarter’s revenue.

Services contribute to about 1/3 of the revenue.

Mac, iPad, and Wearables are close in their popularity, between 7% and 9%.

In terms of the product performance, iPhone grew by 13.5% YoY in June. This is a considerable acceleration from the 2% growth observed in March.

iPhone’s growth was broad-based across all geographies. Sales were especially strong in India, the Middle East, South Asia, and Brazil.

Mac sales also grew by 15% YoY, another meaningful uptick from March’s 7% growth. This success was driven by the new M4 MacBook Air.

Unfortunately, both iPad and Wearables segments declined in sales by 8-9% as they lacked newer models, with the exception of Apple Watch. Apple Vision Pro got one line of mention in its software update during earnings, but the reality is that it’s not driving significant growth since the initial launch.

While Apple claims to be making Apple Intelligence features deeply embedded into Apple products with greater privacy and personalisation, as an end user I do not yet feel the “magic”.

Compared with Google’s proprietary AI (Gemini), Apple has chosen an AI-carrier approach.

Of course, one may argue that it provides Apple with maximum flexibility, lowest costs, and potentially higher revenue - just think about Google paying Apple billions for making Google the default search option on Safari.

However, my sense is that Apple is now becoming alert by its weak positioning in AI and may start ramping up resources towards developing it internally. In 2026, Apple plans to at least launch a more personalised Siri.

Regional Performance

44% of Apple’s sales come from Americas. Europe contributes to about a quarter of the total sales, while China at 17%.

Sales in Americas and Europe were robust in Q3, growing at 9-10%. There is a high degree of pull-forward demand in the US due to tariff uncertainties.

Importantly, Greater China grew by 4% in the quarter, a notable improvement from its flat result in Q2.

Finally, Japan grew at a respectable 13%, although slower than Q2. Rest of Asia Pacific increased by a whopping 20% in revenue.

Most US-sold products now originate from India (iPhone) and Vietnam (Mac, iPad, Watch). To mitigate tariff impact, Apple is focusing on supply chain optimisation and increased onshore investments in the US - including the domestic production of semiconductors.

TTM Revenue

On a trailing-twelve-month basis, AAPL’s revenue sits at $408 billion, with 6% growth. While still in the single digit territory, at least that growth line is moving in the right direction.

2. Profitability

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