Apple shares were on track to shed nearly $500 billion in market capitalization on Friday after a forecast that exposed the limits of the company's supply-chain control. The drop, if sustained, would mark the stock's worst session since the pandemic-driven selloff in March 2020 and hand the title of world's most valuable company back to Nvidia, days after Apple had reclaimed it.
Cook's Final Call as CEO
The warning came on Tim Cook's last earnings call as chief executive before he hands the role to John Ternus in September and becomes executive chairman. Cook described the component shortages as "very significant" and said Apple had limited options to address them. "If even at Apple's scale they are saying they are out all supply chain flexibility, it's really bad for everyone," said Ben Bajarin, chief executive of Creative Strategies.
Supply Chain Flexibility Exhausted
Big Tech competitors have been absorbing advanced chip-making capacity and memory for AI data centers, driving shortages and price increases that are expected to shrink both the personal computer and smartphone markets this year. Apple had cushioned the memory-cost surge by drawing on stockpiled inventory, but Cook said that buffer was fading and processor shortages were now preventing the company from meeting strong demand for iPhones and Macs.
Services Weakness Adds to Concern
Investors focused on a slowdown in the services segment, which arrived during a stretch of strong iPhone sales that typically feed App Store revenue. The deceleration could deepen if the next iPhone lineup, expected in September, carries the price increases many analysts anticipate. Morgan Stanley analysts said Apple's leverage over the supply chain "appears to be in question" and that AI is not serving as "any measurable tailwind to products or services, with its future monetization impact still uncertain." They added that App Store softness might even reflect AI re-prioritizing customer time.
Analysts Split on Price Targets
Other analysts noted the iPhone has weathered previous price hikes without significant demand erosion and pointed to a new U.S. leasing deal with Klarna offering monthly device plans as a potential cushion. At least four brokerages cut price targets while three raised them, moving the median view to $330, $3 below the last closing price, according to LSEG data. The stock has risen 22.7 percent this year as of Thursday's close.