Apple on Thursday disclosed its iPhone sales dipped slightly during the holiday season quarter, signaling a sluggish start to the trendsetting company’s effort to catch up to the rest of Big Tech in the race to bring artificial intelligence to the masses.
The iPhone’s roughly 1% drop in revenue from the previous year’s October-December period wasn’t entirely unexpected, given the first software update enabling the device’s AI features didn’t arrive until just before Halloween, and the technology still isn’t available in many markets outside the U.S.
The countries still awaiting Apple’s AI suite include China, a key market where the company continued to lose ground. Although he didn’t mention China, Apple CEO Tim Cook told investors on a conference call that a software upgrade enabling the AI features in more European markets, as well as Japan and Korea will be rolling out in April.
But in the past quarter Apple also was only able to eke out a modest revenue gain across its entire business, although the results came in ahead of the analyst projections that guide investors. The Cupertino, California, company earned $36.3 billion, or $2.40 per share, a 7% increase from the previous year. Revenue edged up from the previous year by 4% to $124.3 billion.
Those numbers included iPhone revenue of $69.1 billion. In China, Apple’s total revenue registered $18.5 billion, an 11% decrease from the previous year.
Part of that erosion in China reflected the iPhone’s shrinking market share in that country, where homegrown companies have been making more headway. Apple’s iPhone year-over-year shipments in China declined nearly 10% in the most recent quarter, while native companies Huawei and Xiaomi posted year-over-year increases of more than 20%, according to the research firm International Data Corp.
“While China is a potential risk, we think the appeal of Apple products as a luxury product and the potential of AI innovations will keep demand steady in the country,” Edward Jones analyst Logan Purk wrote in a research note assessing the company’s quarterly report.
The holiday-season results served to confirm bringing AI to the iPhone and Apple’s other products may not boost the company’s recently lackluster growth as much as investors initially thought it might after Cook unveiled the technology before a rapt crowd last June.
The anticipation that an AI-infused iPhone would prod hordes of consumers to ditch their current devices and splurge on an upgrade is the main reason Apple’s stock price surged by 30% last year. But the sinking realization that an uptick in demand may take longer than expected has caused Apple’s shares to backtrack by 5% during the first month of the new year. The stock initially slipped slightly in extended trading after the numbers came out, but later reversed course and rose by more than 3% after Cook said Apple is seeing a record number of people upgrading their iPhones.
“I could not feel more optimistic about our product pipeline,” Cook said during the conference call. “So I think there’s a lot of a lot of innovation left on the smartphone.”
A management forecast calling for revenue that will at least match or exceed analyst projections for the January-March quarter also seemed to bolster investor confidence in the company.
The concerns hovering around Apple’s weakening iPhone sales come against broader worries about whether AI will be as lucrative for U.S. tech companies as once envisioned after Chinese startup DeepSeek released a version of the technology that was built at a far lower cost than had been previously thought possible.
Unlike tech peers such as Microsoft, Google corporate parent Alphabet Inc., and Facebook corporate parent Meta Platforms, Apple hasn’t been investing as heavily in AI – one of the reasons it has been seen as an industry laggard. But that restraint could work to its advantage if DeepSeek’s early breakthroughs in driving down AI costs gain momentum.
Apple’s services division remained the company’s biggest moneymaker outside the iPhone, with revenue of $26.3 billion in the past quarter, a 14% increase from the previous year. Although the services division has been thriving for years, it generates more than $20 billion annually by locking in Google as the automatic search engine on the iPhone and other products. That deal is now under threat of being banned as part of the proposed punishment for Google’s search engine being declared an illegal monopoly.
Shares of United Parcel Service (UPS-14.39%) dropped 15% on Thursday, marking its worst day ever, after the company announced a significant reduction in its business with Amazon (AMZN-0.84%), its largest customer. The move, which will see UPS lower its Amazon-related revenue by more than 50% by the second half of 2026, has rattled Wall Street.
While the loss of Amazon’s business might appear to be a major blow, UPS justified the decision as part of a broader strategy to prioritize more profitable deliveries.
“Amazon is our largest customer, but it’s not our most profitable customer,” UPS CEO Carol Tomé said during the company’s Jan. 30 earnings call. “Its margin is very dilutive to the U.S. domestic business.”
Amazon accounted for 11.8% of UPS’s total revenue – roughly $10.7 billion – but its low-profit margins have been a drag on the company’s overall profitability. UPS is now focusing on higher-margin opportunities despite the short-term financial hit.
UPS and Amazon have been partners for nearly 30 years, and Tomé stressed that UPS “holds the company [Amazon] in high regard” but that “it was time to step back and reassess our relationship.” The announcement, which left investors unsettled, was coupled with a warning of lower-than-expected 2025 revenue.
Bernstein (AB+0.89%) analyst David Vernon defended the company’s strategy, arguing the market’s negative reaction was an overreaction. In a research note, Vernon said UPS “didn’t pull the football, but definitely moved the goal posts,” adding that the shift toward higher-margin operations would ultimately strengthen UPS’s financial health. He maintained a “Buy” rating on UPS with a price target of $179 per share, though he revised his 2025 revenue estimates down by 4-5%.
UBS (UBS-0.25%) analyst Stephen Ju also weighed in, suggesting that Amazon may be entering a phase of “lower capital intensity” in its e-commerce business, which could signal further changes in its relationships with delivery companies.
Evercore ISI (EVR+1.86%) analyst Jonathan Chappell noted that while UPS’s fourth-quarter results showed positive signs, including stronger-than-expected profits and improved margins in its domestic business, the decision to cut Amazon’s volumes by over 50% was a “surprise.” Chappell added that the move accelerated the decline of a business segment that had long been seen as a “tail risk” for UPS.
UPS’s big Amazon reduction isn’t all that’s changing. The company also made changes to its UPS SurePost service. Effective Jan. 1, 2025, UPS moved all of SurePost operations in-house, ending its reliance on the U.S. Postal Service for last-minute delivery. UPS explained that the changes to the USPS operating model, which would increase delivery times and raise costs, made the partnership less viable. “The value proposition of an increased cost as well as deteriorating service didn’t work for us,” Tomé said.
UPS expects to justify the change by focusing more on higher-margin, complex services like its healthcare sector. To offset declining volume, the company closed 11 facilities in 2024, which is expected to save $1 billion.
The chairman of the Federal Communications Commission has waded into the politicized debate over NPR and PBS, ordering up an investigation that he said could be relevant in lawmakers’ decision about whether to continue funding the public news organizations.
Brendan Carr, the chairman, said in a letter to NPR and PBS on Wednesday that the inquiry would focus on whether the news organizations’ member stations violated government rules by recognizing financial sponsors on the air.
Mr. Carr said that NPR and PBS stations operate as noncommercial broadcast organizations, but that they may be airing “announcements that cross the line into prohibited commercial advertisements.”
“To the extent that these taxpayer dollars are being used to support a for-profit endeavor or an entity that is airing commercial advertisements,” Mr. Carr wrote, “then that would further undermine any case for continuing to fund NPR and PBS with taxpayer dollars.”
The letter is the latest action from President Trump’s allies to target NPR and PBS stations and the Corporation for Public Broadcasting, a taxpayer-funded organization that backs them. Executives at NPR and PBS stations have been bracing for a potential battle over government funding, gaming out financial worst-case scenarios.
Mr. Carr, who was appointed by Mr. Trump, said he did not see a reason for lawmakers to continue funding the organizations. He said that he planned to notify members of Congress about his investigation.
Katherine Maher, the chief executive of NPR, said in a statement that the organization’s practice of using sponsorships, also known as underwriting, “complies with federal regulations.”
“We are confident any review of our programming and underwriting practices will confirm NPR’s adherence to these rules,” Ms. Maher said. “We have worked for decades with the F.C.C. in support of noncommercial educational broadcasters who provide essential information, educational programming, and emergency alerts to local communities across the United States.”
PBS said in a statement that it was proud of “noncommercial educational programming,” and worked “diligently to comply with the F.C.C.’s underwriting regulations.”
Two F.C.C. commissioners released statements taking issue with Mr. Carr’s investigation. Anna Gomez, a Democrat, said that the investigation appeared to be an attempt to “weaponize the power of the F.C.C.” Geoffrey Starks, also a Democrat, said that Mr. Carr’s statement gave him “serious concern.”
NPR and PBS have for decades aired sponsorships under rules set forth by the government. While public broadcasters are restricted by law from accepting traditional commercials, the F.C.C. has become more permissive over the years about what public stations are allowed to air. The F.C.C.’s evolving stance on the issue has gradually allowed public radio stations to become less dependent on government funding.
Eric Nuzum, a former NPR executive, and co-founder of the audio consulting and production company Magnificent Noise, said that sponsorships and underwriting differ sharply from advertising on commercial TV and radio in several respects.
“The difference is, in a commercial, the sponsor can say anything they want — it’s their time,” Mr. Nuzum said. “In an underwriting situation, the station provides an acknowledgment of who’s providing the funding, along with basic information about the underwriter.”
Bills are working their way through Congress that would defund public media, including the No Propaganda Act, introduced by Senator John Kennedy of Louisiana and Representative Scott Perry of Pennsylvania, and the Defund NPR Act, introduced by Representative Jim Banks of Indiana.
Earlier this week, NPR executives told staff members that a memo issued by Mr. Trump’s administration imperiled two grant programs benefiting local stations, citing guidance from the Corporation for Public Broadcasting. Mr. Trump’s administration rescinded that memo after it was blocked by a judge.
Seth Stern, the director of advocacy at Freedom of the Press Foundation, said he believed Mr. Carr seemed to be setting up a legal pretext for interfering with public media.
“The end of Mr. Carr’s letter tellingly goes far beyond underwriting and talks about his thoughts on whether public media should be funded at all and notes that this underwriting issue might be relevant to a broader legislative debate,” Mr. Stern said. “That was troubling to read.”
The auto industry is bracing for impact after President Donald Trump confirmed Thursday that he will impose 25% tariffs on Canada and Mexico starting Saturday.
The promise, he said during a signing of executive orders related to a deadly airplane crash, is in response to illegal immigration, the flow of fentanyl, and trade deficits with the countries. There weren't further details except that the administration is contemplating whether to exempt oil from the duties on the two neighboring countries, which are the domestic auto industry's biggest trading partners. Tariffs could increase the cost of materials, auto part, and vehicles that cross the border — which often happens multiple times in the assembly of a vehicle, compounding the duties.
General Motors Co. and Stellantis NV directed a comment to the American Automotive Policy Council, a trade group that represents the Detroit Three. The organization has been advocating for exemptions for vehicles or parts for which manufacturers have invested to comply with the United States-Mexico-Canada trade agreement's rules of origin. It's argued the duties would reward those who opted against investing in North America and the United States under the terms signed by Trump in 2020.
“American Automakers have invested tens of billions of dollars to meet the USMCA’s stringent sourcing requirements," Matt Blunt, AAPC president and former Missouri governor, said in a statement, "and look forward to working with President Trump to preserve and strengthen U.S. auto manufacturing and North American competitiveness."
Ford Motor Co. didn't immediately have a comment.
The auto industry imported close to $450 billion worth of goods from Mexico and Canada in 2023.
Trump's promise to institute the tariffs, an action he said he would take in November before being sworn into office, comes as affordability is the buzzword for the auto industry in 2025. Although 2024's sale of nearly 16 million new vehicles showed a robust appetite by Americans for cars, trucks, and SUVs, manufacturers and dealers are under pricing pressure as interest rates limit dollar power and consumers have more options now that inventories have returned to more normal levels following the pandemic and parts shortages. Plus, automakers are seeking to continue investing in the electrified vehicle transition as China flies ahead in EV technology and manufacturing.
"If it’s placed on everything that’s manufactured in Canada and/or Mexico," said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions LLC, "that will be extremely painful for the auto industry, not just the manufacturers that have vehicles there, but the vast number of suppliers that ship parts back and forth across the border."
Short-term, companies might have to eat the levies, but if tariffs were to be imposed at length, then consumers could see vehicle prices increase, Fiorani said.
"Suppliers are not making so much money on these tariffs that they can absorb that cost," he said. "Some emergency patches are going to have to be put in place to keep the smaller supplier alive."
Speaking at the Washington, D.C., Auto Show shortly before the president’s latest tariff comment, leaders from across the industry warned — as many have since Trump first threatened tariffs on Nov. 26 — that new trade barriers could have an immediately devastating impact.
Long’s organization, a trade group representing U.S. vehicle parts suppliers, claims that auto parts production is the largest manufacturing sector in the United States.
“Our members have said that if tariffs were imposed on Canada and Mexico, it would shut down vehicle production," Long said during a discussion panel. “Because it only takes one supplier to shut down an entire production line for OE (original equipment) production, and that shutdown impacts all suppliers.”
Jennifer Safavian, president and CEO of the lobbying group Autos Drive America, shared similar concerns.
“For the auto industry, parts will pass back and forth across the border seven times, perhaps, before they’re a finished product,” said Safavian, whose organization represents foreign automakers like Toyota Motor Corp., Volvo Cars, and others. "It could have a significant impact on the U.S. auto industry and production of vehicles."
She also noted that the “devil will be in the details” as the specifics matter for the highly complex automotive supply chain.
With the actual making of vehicles and their parts in flux, industry leaders said the impact from tariffs will flow down to auto dealers and consumers at a moment of already high prices — with many labeling the current moment as an affordability crisis. The average new-vehicle transaction price is approaching $50,000, said Cody Lusk, who heads the American International Automobile Dealers Association.
“You add possibly $10,000 to a car being imported from wherever the tariffs hit,” he said. “It's a big deal.”
Automakers already have taken steps to do what they can at little to no cost to prepare for potential tariffs. GM Chief Financial Officer Paul Jacobson said this week the company has expedited imports of vehicles produced in Canada and Mexico to the United States.
Except for GM trucks, there aren't other plants in the United States that produce vehicles — from the Ford Maverick to the Chevrolet Equinox to the Chrysler Pacifica — mostly produced by the Detroit Three in those countries. GM CEO Mary Barra this week said some pickup capacity may be able to be added to U.S. truck plants, but she emphasized the need to protect cash flow, too.
"What we won't do is spend large amounts of capital without clarity," Barra said about responding to potential tariffs during an investor call.
Fiorani said retooling for an entirely new vehicle can take a year or more. Even then, companies like Ford, which produces the most vehicles of the three in the United States, have less U.S. capacity available than others.
In Canada, GM produces light and heavy-duty trucks and Chevrolet BrightDrop EVs, as well as engines and transmissions. GM makes some of its light and heavy-duty trucks in the United States.
Ford makes the Bronco Sport, Maverick compact truck, and the all-electric Mustang Mach-E in Mexico. Its Oakville Assembly Complex in Canada is currently idled but is slated to build Super Duty trucks in the coming years. Ford builds engines in both Canada and Mexico. It also has an electric powertrain center in Mexico.
Stellantis NV builds the Chrysler Pacifica minivans and new Dodge Charger Daytona electric muscle car in Canada. In Mexico, Stellantis builds the Ram heavy-duty trucks, the Ram Promaster van, the Jeep Compass small crossover, and the Jeep Wagoneer S electric SUV. Stellantis also has engine and stamping operations in Mexico and casting operations in Canada.
David Dauch, CEO of Detroit Tier 1 supplier American Axle & Manufacturing Holdings Inc., told The Detroit News this week the supply chain remains "fragile" from production disruptions and inflation over the past few years. AAM emphasizes manufacturing near its customers and has little exposure to Canada save from a handful of suppliers it's managed in the past. But insourcing and vertical integration all take time, Dauch noted.
President Donald Trump said his 25% tariffs on Canada and Mexico are coming on Saturday, but he’s still considering whether to include oil from those countries as part of his import taxes.
“We may or may not,” Trump told reporters Thursday in the Oval Office about tariffing oil from Canada and Mexico. “We’re going to make that determination probably tonight.”
Trump said his decision will be based on whether the price of oil charged by the two trading partners is fair, although the basis of his threatened tariffs pertains to stopping illegal immigration and the smuggling of chemicals used for fentanyl.
The risk of tariffs on Canadian and Mexican oil could undermine Trump’s repeated pledge to lower overall inflation by reducing energy costs. Costs associated with tariffs could be passed along to consumers in the form of higher gasoline prices — an issue that Trump placed at the center of his Republican presidential campaign as he vowed to halve energy costs within one year.
“One year from Jan. 20, we will have your energy prices cut in half all over the country,” Trump said at a 2024 town hall in Pennsylvania.
AP VoteCast, an extensive survey of the electorate, found that 80% of voters identified gas prices as a concern. Trump won nearly 6 in 10 voters who said they worried about prices at the pump.
The United States imported almost 4.6 million barrels of oil daily from Canada in October and 563,000 barrels from Mexico, according to the Energy Information Administration. U.S. daily production during that month averaged nearly 13.5 million barrels a day.
Matthew Holmes, executive vice president and chief of public policy at the Canadian Chamber of Commerce, said Trump’s tariffs would “tax America first” in the form of higher costs.
“This is a lose-lose,” Holmes said. “We will keep working with partners to show President Trump and Americans that this doesn’t make life any more affordable. It makes life more expensive and sends our integrated businesses scrambling.”
But Trump showed no concerns that import taxes on the United States trading partners would hurt the U.S. economy, despite the risk shown in many economic analyses of higher prices.
“We don’t need the products that they have,” Trump said. “We have all the oil you need. We have all the trees you need, meaning the lumber.”
The president also said that China would pay tariffs for its exporting of the chemicals used to make fentanyl. He has previously stated a 10% tariff that would be on top of other import taxes charged on products from China.
Oil prices were trading at roughly $73 a barrel on Thursday afternoon. Prices spiked in June 2022 under President Joe Biden to more than $120 per barrel, a period that overlapped with overall inflation hitting a four-decade high that fueled a broader sense of public dissatisfaction with the Democratic administration.
Gas prices are averaging $3.12 a gallon across the United States, roughly the same price as a year ago, according to AAA.
Later on Thursday, Trump threatened more tariffs against countries looking at alternatives to the U.S. dollar as a means of global exchange.
The president previously made the same threat in November against the so-called BRICS group, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates.
Russian President Vladimir Putin has suggested that sanctions against his country and others mean that nations need to develop a substitute for the dollar.
“We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” Trump posted on social media.