Apple shares fell sharply in pre-market trading on Friday after the company warned that ongoing supply constraints would weigh on revenue growth in the coming quarter, despite reporting stronger-than-expected iPhone sales.
The stock dropped 7.3% before the opening bell, putting Apple on track to lose an estimated $361.6 billion in market value if the decline continues through the trading session.
Supply Issues Weigh on Outlook
Apple said shortages in advanced semiconductor manufacturing capacity are limiting supplies of iPhones, Macs, and certain iPad models, preventing the company from fully meeting customer demand.
Chief Executive Officer Tim Cook stated that the weaker outlook is primarily the result of supply constraints rather than slowing consumer demand.
The broader technology industry is also facing similar challenges as surging demand for artificial intelligence (AI) infrastructure has tightened supplies of advanced chips and memory, increasing production costs and extending supply-chain bottlenecks.
Revenue Forecast Misses Expectations
Apple forecast 9% to 11% revenue growth for the current quarter, falling short of Wall Street expectations of approximately 12%.
The company also projected mid-teen percentage growth in iPhone revenue, slightly below analyst estimates, prompting concerns among investors despite healthy product demand.
iPhone Sales Beat Estimates
Despite the cautious guidance, Apple’s latest quarterly results showed strong momentum in its flagship smartphone business.
iPhone revenue rose 21.7% year-over-year to $54.25 billion during the June quarter, exceeding analysts’ expectations of $53.86 billion and marking the strongest third-quarter iPhone sales in the company’s history.
Price Hike in Focus
Apple is widely expected to increase iPhone prices later this year. Investors are now watching whether the company can pass on higher production costs without significantly affecting consumer demand.
Analysts at J.P. Morgan said the supply shortages are likely to delay sales rather than eliminate them, suggesting that revenue could shift into future quarters once production improves.
Meanwhile, analysts at TD Cowen believe Apple’s upcoming iPhone lineup, AI-powered Siri enhancements, and the company’s upgrade program could support higher prices without causing a major decline in demand.
Leadership Transition Ahead
Apple also confirmed that Tim Cook will step down as Chief Executive Officer at the beginning of September, with John Ternus set to take over leadership of the company.
Cook’s tenure transformed Apple into one of the world’s most valuable companies and a dominant member of the “Magnificent Seven” technology stocks.
