Apple shares fall 7% as AI chip shortage caps record iPhone revenue
Apple wiped out $360bn in market value despite posting record iPhone revenue, highlighting how the global race for artificial intelligence infrastructure is now squeezing consumer electronics supply chains and corporate margins.
Apple lost approximately $360bn in market value after its stock dropped more than 7% ahead of Friday’s trading session. The sell-off happened despite the technology giant posting its strongest June quarter on record for iPhone sales.
Revenue from the handset reached $54.25bn, marking a 22% increase that comfortably beat Wall Street estimates of $53.86bn. Investors, however, chose to focus on the company's forward guidance rather than its historical performance.
The manufacturer projected revenue expansion between 9% and 11% for the current quarter, missing the 12% consensus among analysts. Chief executive Tim Cook attributed this softer outlook to “supply constraints, rather than weak demand.”
The root cause of these bottlenecks is the global artificial intelligence boom. A massive build-out of data centres has triggered a scramble for advanced semiconductors, tightening availability and driving up component costs across the entire sector.
Memory chips have faced the most severe squeeze as AI servers absorb available manufacturing capacity. Apple noted that limited access to advanced chipmaking is now restricting supplies of its three core hardware pillars: the iPhone, Mac, and iPad.
This supply crunch extends well beyond Cupertino, pushing up prices for consumer electronics that must compete with AI infrastructure for scarce components. The market reaction mirrors a wider trend this year, where strong earnings from tech giants like TSMC have been punished by investors fretting over AI-related costs.
JP Morgan described the situation as a collision where “demand robustness is running into a wall of supply and cost challenges.” To keep production lines running, Apple has even lobbied Washington for permission to purchase memory from China’s CXMT.
The company now faces a difficult choice regarding its industry-leading profit margins. Analysts at TD Cowen suggest Apple could raise handset prices to offset climbing costs without significantly denting consumer demand.
This supply dilemma arrives at a critical juncture for the company’s leadership. Tim Cook is scheduled to step down in September, handing the chief executive role to hardware chief John Ternus.
Ternus inherits a business with record sales momentum but growth that is strictly gated by external supply chain forces. His immediate challenge will be balancing the cost of the AI-driven component squeeze against the pricing tolerance of the customer base.
