Apple rallies as US tariff reprieve buys time to rework supply chain; analysts readjust price targets

Apple and other major US electronics stocks climbed sharply on Monday after the government granted a temporary exemption from new tariffs on Chinese imports.

Apple was seen rising 5.86% in premarket trading. Other hardware makers also benefited, with Dell Technologies gaining 6.26%, Super Micro Computer up 5.2%, and HP Inc. advancing 4%.

The US Customs and Border Protection agency announced on Friday that smartphones, computers, and other electronics would be spared from fresh tariffs, with the exception of a specific 20% duty tied to the ongoing fentanyl crackdown.

“The removal of the worst-case scenario is an element of support, at least temporarily, for the sector,” said Alberto Gegra, an analyst at Equita.

He noted that the exemption prevents the possibility of a near-total blockade of supplies, which some had feared if China-related tariffs had exceeded 100%.

Apple seen as prime beneficiary as investors look past lingering risks

Despite the positive news, risks remain.

Both administration officials and President Donald Trump himself reiterated over the weekend that tech products could still face targeted tariffs as part of a broader investigation into semiconductors.

However, analysts and investors are betting that any such levies would likely be less severe than the blanket tariffs imposed on Chinese imports, some of which reached as high as 145%.

Among tech giants, Apple appears poised to gain the most from the reprieve.

The company, which assembles the vast majority of its products in China alongside increasing output in India and Vietnam, has faced intense scrutiny over its supply chain vulnerabilities.

Estimates suggest that between 80% and 90% of iPhones are still made in China.

Dan Ives, a longtime Apple analyst at Wedbush Securities, said the temporary relief gives Apple crucial time to recalibrate its operations.

“Apple has 1-2 months to plan its supply chain for a tariff component, with India likely the biggest focus area for expanded iPhone production,” Ives noted.

He also pointed out that the breathing room allows Apple to avoid immediately passing steep price increases onto US consumers.

According to Ives, the combination of the base tariff and the Section 232 tariffs would fall at a “somewhat manageable level” in the near term, giving Apple the ability to plan for any future adjustments.

“Apple can chart a clearer path, passing some costs to US consumers while absorbing part of the impact within its supply chain,” he added.

Earnings outlook hinges on China talks, but long-term story intact

Looking ahead, Ives forecasts that Apple’s earnings could decline around 10% in 2025 and 2026 in a base case scenario, due to demand softening and higher production costs.

In a worst-case outcome, where negotiations with China stall and tariffs persist for months, the earnings hit could deepen to between 15% and 20%.

However, there is room for optimism. If progress is made in trade talks and tensions ease by the summer, Ives believes the impact could be contained to a more modest 2% to 5%.

He maintained an Outperform rating on Apple stock, with a price target of $250, underlining his confidence in the company’s long-term prospects.

“We remain bullish on Apple’s long-term story,” Ives said, citing its 1.5 billion iPhone users, an installed base of 2.4 billion iOS devices, and its rapidly growing services division as key strengths.

“Investors need to look beyond the next three months and assume progress on the China front.”

Analysts adjust price targets for Apple

While Apple may find some near-term relief, uncertainty still lingers.

“While Apple is likely relieved near-term, uncertainty remains. In the end, our bet is still on Apple and Tim Cook — who may still need to increase its 4-yr $500 billion in US spending guarantees with the Trump administration to get out of paying tariffs altogether,” wrote Melius Research analyst Ben Reitzes in a research note on Monday.

Reitzes kept a Buy rating on Apple shares, with a price target of $226.

Citi Research analyst Atif Malik struck a similar tone, saying Apple stock was poised to rally after the tariff exemption, but warned that “Apple products are not immune from a weak macro environment.”

Malik maintained his Buy rating on the shares, with a price target of $245.

KeyBanc Capital Markets analyst Brandon Nispel called Friday’s announcement “probably the best-case scenario” for Apple, making it unlikely that his earlier downside target of $170 would be reached.

Nispel, who upgraded Apple shares to ‘sector weight’ from ‘underweight’ in a note on Monday, cautioned that Apple’s sluggish AI progress and softer consumer spending continue to pose challenges, leaving the tech giant “not fully out of the woods” from its year-to-date downturn.

He also flagged concerns around the US Department of Justice’s antitrust case against Google, which could threaten the estimated $20 billion Apple earns each year from search revenue through its Safari browser.

“That said, with the worst-case scenario of an escalating trade war likely off the table and smartphones spared from tariffs, it is difficult to argue for further downside in the stock,” he added.

JPMorgan analysts adjusted their outlook, reducing the stock’s price target from $270.00 to $245.00, while still maintaining an Overweight rating.

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