Apple has warned investors of major supply constraints that will affect the availability of its most popular products, including iPhone, iPad, and Mac.
The announcement sent shares down nearly 10% and erased nearly $500 billion in market value.
CEO Tim Cook, speaking about his final warning call before handing it to new CEO John Ternus in September, said the company faces “very significant constraints currently with limited flexibility in the supply chain to remedy it.”
He stressed that the primary problem is not a supplier failure but unexpectedly strong demand, especially for iPhone and Mac products, which raised about 22% and 25% respectively during the June quarter.
The firm announced a 16% growth in revenues at $109 billion and a 26% growth in profits at $29 billion, mainly due to iPhone 17 sales that Cook referred to as the biggest launch in the firm’s history. However, the forecast for the September quarter of 9% to 11% growth in revenues came below Wall Street’s prediction of 12%.
The reasons for the supply issues are mostly attributed to the lack of chips globally as tech firms purchase advanced chip production capabilities and memory chips to fuel their AI data centers. Cook mentioned how Apple used its stock inventory to soften the impact of increasing memory prices in previous years, but this will not last much longer.
Cook said: “We’ve got a quarter ahead where we will be scrambling on the supply side.”
In addition, the tech giant observed that its gross margin was 2% better for the previous quarter due to tariffs being returned, which the BBC estimated to be about $1.1 billion. “We plan to reinvest the tariff refunds back into the US,” stated Cook.
Analyst William Kerwin of Morningstar lowered Apple’s fair value target to $285 from $290, citing short-term supply shortages and pressure on memory prices. “Supply shortages and memory price inflation will weigh on results through 2027,” he added, although he also pointed out that the recent 15% to 25% price increases by the company would cushion the blow.
Before the sell-off, the stock had rallied 22.7% this year, and Nvidia is now set to once again become the world’s most valuable company.
2026-08-01 23:49:00
