markets

Luke Kawa4/7/25

Wedbush slashes Apple price target, says “tariff economic Armageddon” hurts it more than any tech company

Wedbush analyst Dan Ives cut his price target on Apple by 23%, saying that no US tech company is going to be hit as hard as the iPhone giant by reciprocal tariffs slated to go into effect on Wednesday.

From a note to clients on Sunday:

“The tariff economic Armageddon unleashed by Trump is a complete disaster for Apple given its massive China production exposure. In our view, no US tech company is more negatively impacted by these tariffs than Apple with 90% of iPhones produced and assembled in China. We have seen Apple navigate very uncertain times in the supply chain during Covid... but for the stock it was feasible for investors (and us) at the time to look past March or June 2020 quarters and understand and value what normalized 2021 earnings could look like as normalization would happen. This tariff situation is dramatically different and a very scary prospect as the current tariff slate with China at 54% and Taiwan at 32% would be devastating to Apple, its cost structure, and ultimately consumer demand... it’s not a debate in our view.”

Apple has tumbled nearly 16% from President Trump’s Rose Garden announcement to Friday’s close and nearly 4% premarket, as it has massive operations in Southeast Asia, where reciprocal tariff rates are ultrahigh. Analysts at Morgan Stanley see just a 20% chance that Apple receives an exemption from these levies.

Ives also lowered his earnings and revenue forecasts on Apple for this calendar year as well as 2026.

However, even after that price target cut — and the alarm bells clearly blaring, in Ives’ eyes — the analyst still has an “outperform” rating on the stock, and sees it rallying 32% from Friday’s close.

“We stay bullish for the long-term view on Apple as the Services business and strong FCF support a base case valuation of $250... Our bear case is $160 and bull case (tariffs removed or exempt) is back to $325,” he wrote.

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Max Knoblauch7h

Southwest reports lower-than-expected Q1 earnings and revenue, declines to offer full-year profit update

Southwest Airlines reported its first-quarter earnings after the bell on Wednesday. Its shares fell more than 6% in after-hours trading.

For the first quarter, Southwest reported:

Adjusted earnings of $0.45 per share, compared to the $0.47 per share expected by Wall Street analysts polled by Factset.
Revenue of $7.25 billion, compared to estimates of $7.27 billion.

The carrier guided for adjusted earnings of between $0.35 and $0.65 per share for its second quarter, a range whose midpoint is below analyst estimates of $0.53 per share. Regarding its full-year 2026 earnings estimate of “at least” $4 per share, Southwest declined to give an update “given the ongoing macroeconomic uncertainty.”

“Achieving this outcome would require lower fuel prices and/or stronger revenue performance to offset higher fuel expense,” Southwest said.

Southwest introduced bag fees last year, ending a more than five-decade-long “bags fly free” policy. Earlier this month, less than a year after the change, it joined its major US rivals in hiking its bag fees by $10 amid surging jet fuel prices.

Southwest, which discontinued its fuel-hedging program last year, said it spent $1.36 billion on fuel and related taxes in the first quarter, up 8.6% year over year.

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Matt Phillips7h

ServiceNow dives after reporting sequential decline in profit margins

Cloud software giant ServiceNow — which has been something of a poster child for the AI-related software sell-off — saw its shares fall sharply after delivering Q1 results that included a quarter-on-quarter decline in profit margins.

The company reported:

Revenue of $3.77 billion, higher than the $3.75 billion analyst consensus estimate published by FactSet.
Diluted adjusted earnings of $0.97 per share, on point with the $0.97 analysts had expected.
Subscription revenue of $3.67 billion vs. the $3.65 billion predicted.
Non-GAAP gross margins of 79.5%, down from 80.5% in Q4.

ServiceNow issued guidance for Q2 subscription revenues of between $3.815 billion and $3.820 billion, compared to the $3.75 billion FactSet consensus estimate.

ServiceNow shares have been at the epicenter of the software sell-off driven by the fear that such companies are at risk of being rendered obsolete by AI. The stock was down 33% for the year through the end of the New York trading session on Wednesday.

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Matt Phillips8h

IBM falls despite posting better-than-expected Q1 results

Big Blue fell in after-hours trading despite reporting better-than-expected Q1 results, as it didn’t include in the release an internal metric it typically discloses to track the progress of its AI business. IBM reported:

Q1 revenue of $15.92 billion vs. the $15.63 billion FactSet consensus estimate.
Adjusted earnings per share of $1.91 vs. the $1.81 consensus expectation.
Sales of $7.05 billion at its key, high-margin software segment vs. a $6.98 billion consensus of nine analyst estimates.
Sales of $3.33 billion in its infrastructure unit, which houses its growing AI mainframe business, vs. a $3.13 billion consensus estimate.

Unlike recent earnings statements, the company made no mention of an internal metric it used to track its progress in AI, which it called its “generative AI book of business.” That metric stood at $12.5 billion at the end of 2025, per the company.

The infrastructure business is of acute interest to the market, after AI giant Anthropic announced in February that Claude Code could efficiently modernize code bases in the COBOL programming language, which serves as a cornerstone of IBM’s enterprise mainframe business. The language is still widely used in certain industries, such as airlines and finance. (ATMs, for instance, run almost entirely on COBOL.)

Anthropic’s COBOL announcement cut the legs out from under IBM. The stock plunged 13% on February 23, the day of the announcement — its worst daily drop in more than 25 years. And it was down roughly 15% for the year through the end of trading Wednesday.

Tesla Q1 earnings and revenue beat Wall Street’s estimates

Tesla reported earnings after the bell Wednesday.

Tesla Showroom Displays Model Y And Optimus Robot Visual In Shenzhen

Tasha Matsumoto

Stocks close at new record high as US extends ceasefire with Iran

The mood was risk-on as traders bought Big Tech, AI names, and speculative stocks.

Bull

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