Apple Least Exposed to 25% AI Chip Tariff with 47% Gross Margins
Apple’s custom A-series and M-series chips power only its own devices and aren’t sold as standalone AI accelerators, insulating the company from the new 25% US tariff on AI chips. With $416 billion in trailing revenue and 47% gross margins, Apple can absorb incremental cost increases, explaining its 5% year-to-date stock underperformance relative to pure-play chipmakers.
1. Apple and Google Forge AI Partnership
On January 12, 2026, Apple announced a multiyear collaboration with Google to integrate Gemini—Google’s next‐generation large language models—into its in-house Apple Foundation Models. Under the agreement, Google’s Gemini will power a redesigned Siri and underpin new Apple Intelligence features across iPhone, iPad and Mac devices set to launch later this year. The deal leverages Google Cloud infrastructure, with Apple investing in custom tooling to optimize Gemini for on-device performance. Analysts estimate this partnership could accelerate Apple’s AI roadmap, potentially adding 5–7% to services revenue over the next two years as users adopt premium AI-enabled features and developers build new Siri-integrated apps on iOS 18 and macOS Sequoia.
2. India Issues Final Antitrust Warning to Apple
India’s Competition Commission has issued a confidential final order warning Apple that it will proceed with a formal antitrust investigation unless the company supplies requested information within 30 days. Regulators have been pursuing documents and responses related to App Store policies and in-app purchase commissions for over a year, yet Apple's submissions remain incomplete. If the case advances, India could impose fines up to 10% of local turnover—estimated at $6.8 billion for calendar 2025—or mandate changes to Apple’s IOS ecosystem. Market observers note that an adverse ruling in India, Apple’s third-largest market by revenue, could pressure global gross margins (currently 47.2%) and constrain App Store take-rate expansion plans in 2026.
3. Buffett’s Berkshire Trims Apple Stake as Earnings Outlook Strengthens
Berkshire Hathaway trimmed its Apple position by 41.7 million shares in Q3 2025—reducing exposure from 22% to 18% of its public equity portfolio—yet Apple remains its largest holding. Despite the sale, Buffett has publicly cited Apple’s resilient services growth and strong operating leverage. In its latest analyst note, Seeking Alpha upgraded Apple to a “strong buy,” highlighting 20% year-over-year net income growth in FY 2025 and a 2.54% free cash flow yield that underpins ongoing share repurchases. With iPhone unit shipments projected to grow 4% in the March quarter and services revenue expected to hit $95 billion in FY 2026, investors view any further share reduction by Berkshire as an opportunity to accumulate at an attractive entry point ahead of Apple’s spring product cycle.