Apple shares fell as much as 9% on Friday, their biggest intraday drop since last year's sweeping US tariffs, after the company warned that supply constraints — not weak demand — would hurt growth. The decline put the iPhone maker on track to shed roughly $361.6 billion in market value as investors looked beyond near-term shortages to gauge the impact of an expected iPhone price hike.
The company forecast 9% to 11% revenue growth for the current quarter, below Wall Street's expectation of about 12%, while projecting mid-teens iPhone revenue growth that also lagged analyst estimates. Yet the June quarter itself was strong: iPhone sales rose 21.7% to $54.25 billion, above estimates and marking the best-ever third-quarter iPhone sales. CEO Tim Cook pointed to shortages of advanced chipmaking capacity limiting supplies of iPhones, Macs and some iPads.
The outlook highlights a broader industry challenge: AI-driven demand is tightening supplies of advanced chips and memory, driving up costs and prolonging bottlenecks across the technology sector. 'Demand robustness is running into a wall of supply and cost challenges,' J.P. Morgan analysts led by Samik Chatterjee said, adding that supply constraints would likely defer sales rather than destroy them.
Apple is widely expected to raise iPhone prices later this year, and investors are increasingly focused on whether it can do so without denting demand. TD Cowen analysts said the upcoming iPhone cycle, AI-powered Siri features and Apple's upgrade program could allow the company to increase prices 'without significant demand destruction.'
The sell-off lands at a moment of transition: Cook will hand over the top job to John Ternus at the start of September, capping a leadership era that helped build Apple into the world's most valuable company. Memory-cost inflation and component shortages mean the new CEO inherits the industry's most visible supply-chain squeeze since the AI build-out began.
