Apple (AAP) shares are down nearly 4% on Friday after the iPhone maker reported better-than-expected earnings for its fiscal Q2 but warned of a significant hit from tariffs moving forward. 

The company’s earnings release indicated the escalating U.S.-China trade tensions have already started hurting its business in China. 

Investors are cautious on AAPL shares this morning also because the company’s management said the new tariff environment could add as much as $900 million to its costs in the current quarter. 

Including today’s decline, Apple stock is down about 18% versus the start of 2025. 

Apple Stock Could Sink Further to $170

The iPhone maker guided for “low- to mid-single digit” percentage growth in revenue for its fiscal Q3. But analysts at Jefferies are not convinced that Apple will succeed in delivering on that. 

That’s because the giant’s outlook assumes no tariffs on India and Vietnam and only 20% duties on Chinese imports. However, “these assumptions are unlikely to hold longer term, especially if there will be sectorial tariff that is non-negotiable,” they told clients in a research note today. 

Jefferies downgraded AAPL shares this morning to “Underperform” and trimmed its price target to about $170 that translates to another 12% downside from current levels. 

AAPL Shares Dubbed Uncertain for the Back Half of 2025

Jefferies analysts led by Edison Lee expect tariff impact “will expand over time to create more earnings downside” for Apple in 2025. 

Note that AAPL’s services business, which has become a key driver of its overall revenue growth and profitability in recent years, came in slightly shy of Street estimates. 

Plus, the company’s gross margin also stood in line with expectations only in its fiscal Q2. 

Together, all of this makes Apple shares a more uncertain investment for the back half of this year, said Amit Daryanani, a senior Evercore ISI analyst in a CNBC interview today. 

Wall Street Continues to Rate Apple at ‘Moderate Buy’

Despite near-term challenges and an earnings release that had multiple weak spots, Wall Street remains largely bullish on Apple stock for the long term. 

According to Barchart, the consensus rating on AAPL still sits at “Moderate Buy” with the mean target of about $236 indicating potential upside of 16% from here.