Apple and Amazon both reported strong earnings, beating expectations on both revenue and profit. Apple saw double-digit growth across various products, with its services sector generating a record $27.4 billion. Amazon’s revenue reached $167.7 billion, surpassing forecasts of $162.1 billion, while AWS revenue increased more than 17% compared to last year. However, both companies face challenges due to tariff concerns. Apple expects its costs to rise by $1.1 billion this quarter due to tariffs, following $800 million in tariff costs in Q2 2025. This will continue to put pressure on the company’s stock performance this year.

Amazon’s Operating Income Guidance

Amazon provided a wide operating income estimate for Q3 2025, projecting between $15.5 billion and $20.5 billion. This broad range indicates potential impacts from tariffs, as the previous expectation was around $19.4 billion. CEO Andy Jassy expressed concerns about how tariffs might affect costs and demand. Both Apple and Amazon do not have much protection from AI advancements compared to some competitors. This could make them more vulnerable to tariff effects in the long run. On August 1, 2025, the market reaction suggests that worries over tariffs overshadow the positive earnings reports from both companies. Their forecasts indicate significant challenges ahead, creating uncertainty for these major players.

Market Uncertainty and Recommendations

For Apple, the projected $1.1 billion cost from tariffs this quarter is a significant negative factor, up from $800 million in Q2 2025. Given the stock’s poor performance this year, buying put options for September or October might be a smart strategy to protect against additional decline. Amazon’s income guidance for Q3 raises flags. A range that exceeds 25% of the midpoint shows major uncertainty, likely related to tariffs. This could lead to increased implied volatility, making long straddles an appealing option for traders anticipating a large price movement once the tariff situation clarifies. This isn’t happening in isolation; just last week, the U.S. Trade Representative announced a review of tariffs on over $300 billion of Chinese goods, which has kept the market on edge. The CBOE Volatility Index (VIX) has recently risen to nearly 18, a level not seen in months, reflecting growing anxiety. This situation is reminiscent of the trade tensions in 2019, which caused a spike in market volatility. Create your live VT Markets account and start trading now.

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