By Rajwa Quasim
As global supplies of electronic components tighten amid soaring demand for AI data centers, shares of iPhone maker Apple fell nearly 10% on Friday. If the decline holds, it would mark the company’s biggest single-day drop since the COVID-19 market sell-off in March 2020.
Apple warned that supply chain disruptions could constrain sales in the coming months as demand outpaces the availability of key components. The shortage could also weigh on growth, falling short of analysts’ expectations of about 12% revenue growth. The company has forecast September-quarter revenue growth of 9% to 11%.
The sustained sell-off could erase roughly $450 billion to $500 billion in market value and potentially allow Nvidia to reclaim the title of the world’s most valuable company, just days after Apple regained the top spot.
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Apple relies on Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, for the advanced semiconductors used in products such as the iPhone and Mac.
Speaking on his final earnings call as the CEO, Tim Cook described the current shortages as “very significant.” He said Apple has limited options to fix them in the near term. The company said it underestimated demand for some products and is working to secure alternative suppliers for the memory chips used in Apple’s in-house processors. Tim Cook is set to hand over the CEO role to John Ternus in September and will become executive chairman.
Apple reported June-quarter revenue of $109.42 billion, up 16% from a year earlier, while net income rose 26% to $29 billion. iPhone revenue increased 22% to a record $54.25 billion, and Mac revenue grew 25%. Apple had previously offset rising memory costs by drawing on stockpiled inventory, but those reserves are now running low, making it more difficult for the company to meet strong demand for its devices.
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Morgan Stanley analysts said, “Apple’s leverage over the supply chain appears to be in question and it’s not clear that AI is serving as any measurable tailwind to products or services, with its future monetization impact still uncertain… In fact, one could argue App Store softness might even be a result of AI re-prioritizing customer time.”
Apple also used its earnings call to reaffirm its AI strategy, an area facing growing scrutiny as competitors such as OpenAI and Anthropic roll out more advanced AI assistants. Cook confirmed that Apple’s redesigned Siri remains in public beta and described AI as “an enormous opportunity for Apple going forward.” He said Apple’s ability to process many AI tasks directly on users’ devices, rather than relying on cloud infrastructure, gives it a competitive advantage. “The ability to run on device is also very strategic, and sort of a competitive weapon, if you will,” Cook said.
Apple also reaffirmed its commitment to expanding its manufacturing footprint in the United States, where it plans to invest more than $600 billion over the next four years.