Apple spooked investors Thursday with a warning that significant supply constraints will hit its most important products, sending shares down more than 7% in after-hours trading even as the company posted a 16% revenue jump to $109 billion and a 26% profit increase to $29 billion.
The demand forecast problem
Outgoing chief executive Tim Cook framed the squeeze as a demand forecasting error rather than a supply chain failure. iPhone sales rose 22% in the June quarter, Mac sales 25%, and Cook said the iPhone 17 launch was the largest in company history. "This is not a regular supply issue, it's a demand forecast issue to be candid," he said. "We've got a quarter ahead where we'll be scrambling on the supply side." The constraints have already limited Mac availability and are expected to spread to iPhone and iPad.
Chips and tariffs
The bottleneck sits at the advanced-node microprocessors Apple sources from TSMC in Taiwan. Cook described "very significant constraints currently with limited flexibility in the supply chain to remedy it." Meanwhile, tariff refunds padded gross margin by two percentage points, roughly $1.1 billion, by the BBC's math, and Cook said Apple will reinvest that money in the United States, adding to a previously announced $600 billion domestic manufacturing commitment over four years. China remains the largest manufacturer of Apple products.
Siri and AI
Cook also addressed the long-delayed Siri relaunch, still in public beta, calling it "an enormous opportunity for Apple going forward in AI." He highlighted on-device processing as a strategic differentiator and "sort of a competitive weapon." Negotiations with European Union regulators continue with the goal of a simultaneous global release.
Amazon's contrast
Investors treated Amazon more kindly, pushing its stock up 10% after hours. Amazon Web Services grew 37%, its best quarter in four years, driving overall sales up 20% to $200 billion and more than doubling profits to $63 billion. Free cash flow ran negative $7.6 billion as AI capital spending outpaced operating cash generation. Forrester analyst Tracy Woo said the results show infrastructure investments "meeting market demand rather than outpacing it."