Apple shares plunged nearly 10% on Friday after a disappointing forecast showed the iPhone maker struggling to secure enough components as the AI-driven data centre boom strains global supply chains, putting Nvidia on track to reclaim its title as the world’s most valuable company. The drop, if sustained, could wipe nearly $500 billion from Apple’s market value and mark its worst day since March 2020, just days after Apple reclaimed the top spot from Nvidia.
Tim Cook, who is often praised for his supply-chain expertise, called the shortages “very significant.” He further acknowledged that Apple has limited options to tackle them. It was Cook’s final earnings call as CEO before handing the reins to John Ternus in September and becoming executive chairman.
“If even at Apple’s scale they are saying they are out of all supply chain flexibility, it’s really bad for everyone,” said Ben Bajarin, CEO of tech consultant Creative Strategies.
Big Tech has been buying up chips and memory for AI data centres, causing a visible shortage and, in turn, pushing up prices for PCs and smartphones.
Big Tech is buying up chips and memory for AI data centres, causing shortages and pushing up prices for PCs and smartphones. Apple had cushioned some of the blow from surging memory costs, but Cook said the buffer was fading and processor shortages were keeping it from meeting strong demand for iPhones and Macs.
Its forecast for revenue growth of 9%-11% in the current quarter fell short of Wall Street’s roughly 12% estimate, and softer growth in its services business overshadowed otherwise strong June-quarter results.
- Apple is planning several new Macs and iPads across the end of this year and next spring that could help boost sales. They include the first touch-screen MacBook and a revamped iPad mini, part of end-to-end refreshes to both product lines.
- Apple’s wearables, home and accessories category brought in revenue of $7.88 billion, up 6.5% from a year earlier. That matched estimates of $7.87 billion. Apple is looking to give this segment a boost in the coming months with new watches and a revamped slate of home devices, including a home hub and new TV set-top box.
(With inputs from Reuters, Bloomberg)
