Apple shares dropped nearly 10% on Friday following a disappointing outlook that highlighted the company’s struggles to secure enough components amid an AI-driven data center boom straining global supply chains.
The decline represents the stock’s worst single-day performance since the pandemic-driven selloff in March 2020. It erases some $400 billion from Apple’s market capitalization and hand the title of the world’s most valuable company back to AI chip leader Nvidia, just days after Apple had reclaimed it.
Outgoing CEO Tim Cook, long regarded as an “Operations Genius,” described the shortages as “very significant” during his final earnings call before transitioning to executive chairman in September, with John Ternus set to succeed him. Cook said Apple had limited options to address the constraints.
“If even at Apple’s scale they are saying they are out of all supply chain flexibility, it’s really bad for everyone,” Ben Bajarin, CEO of tech consultant Creative Strategies, told Reuters.
Big Tech firms have been aggressively securing advanced chip-making capacity and memory chips to fuel AI data centers, driving shortages and higher prices that are expected to shrink both the personal computer and smartphone markets this year.
Apple had previously mitigated some of the impact from rising memory costs by relying on stockpiled inventory. However, Cook noted that this buffer is diminishing, while processor shortages are preventing the company from fully meeting strong demand for iPhones and Macs.
The company’s forecast for the current quarter called for revenue growth of 9% to 11%, falling short of Wall Street’s roughly 12% estimate. Softer growth in the services business also tempered otherwise solid June-quarter results.
Services weakness concerns investors
The slowdown in services raised particular concerns because it occurred alongside a period of robust iPhone sales. Services typically benefit from App Store commissions and include offerings such as Apple Music and the Apple TV streaming service.
Analysts warned that any further pressure on iPhone sales — potentially from expected price increases with the new lineup typically launched in September — could deepen the services softness.
Morgan Stanley analysts noted that Apple’s leverage over the supply chain appears diminished and that AI has not yet provided a clear measurable boost to products or services, with future monetization still uncertain. They added that App Store softness might even stem from AI shifting how customers spend their time.
Some analysts remained more optimistic, pointing out that the iPhone has previously absorbed price hikes without major demand damage. A recent U.S. leasing arrangement with Klarna, offering monthly payment plans for Apple devices, could also help offset higher prices.
At least four brokerages lowered their price targets for Apple shares, while three raised them. The median target moved to $330—$3 below the previous closing price according to LSEG data. The stock had gained 22.7% year-to-date through Thursday’s close.
MacDailyNews Take: For perspective, Chevron is worth $392 billion, Caterpillar: $378 billion, and Oracle: $373 billion. Apple today lost more than Chevron, Caterpillar, or Oracle is worth in their entirety. Overreact much, Mr. Market?
Wild overreactions like this are things of beauty! Embrace and profit from them!
Beloved interns, please Tap That Keg™! Three cheers for today’s AAPL deep, deep discount! Prost, Everyone! 🍻🍻🍻
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because of donald trump.