Apple tumbles as supply chain snarls mar forecast in Cook…

On July 31, 2026, Apple shares dropped 7% following a disappointing forecast due to struggles in securing components amid global supply chain issues, particularly affecting iPhone production. CEO Tim Cook described the shortages as 'very significant' during his final earnings call before transitioning to the role of executive chairman. These supply issues are linked to increased demand from the AI sector, raising concerns about further price increases and potential impacts on both personal computer and smartphone markets. Apple's forecasted revenue growth of 9%-11% did not meet Wall Street's expectations of around 12%. While Apple stock has seen a 22% rise this year, investor worry persists over weaknesses in services and iPhone sales, especially with an expected price hike for new models. Analysts remain divided on stock price targets, adjusting their estimates based on these developments.

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Apple's logo at its store in Paris

View of an Apple logo at an Apple store in Paris, France, April 23, 2025. REUTERS/Abdul Saboor/File Photo Purchase Licensing Rights, opens new tab

July 31 (Reuters) - Apple shares fell 7% on Friday after a disappointing forecast showed that the iPhone maker was struggling to secure enough components as the AI-driven data center boom strains global supply chains.

The pre-market drop, if sustained, would erase more than $360 billion from Apple's (AAPL.O), opens new tab market capitalization and ‌return the crown of the world's most valuable company to AI chip giant Nvidia (NVDA.O), opens new tab, days after reclaiming it.

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Tim Cook, widely hailed as a supply-chain genius, called the shortages "very significant" and said Apple had limited options to address them, speaking on his 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 all supply chain flexibility, it's really bad for ⁠everyone," said Ben Bajarin, CEO of tech consultant Creative Strategies.

Big Tech has been scooping up advanced chip-making capacity and memory chips to power its AI data centers, sparking shortages and price increases that are expected to shrink both the personal computer and smartphone markets this year.

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Apple stock has risen over 22% so far this year

Line chart showing Apple's shares

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Source: LSEG dataJuby Babu

Thomson Reuters - 2025

Apple had cushioned some of the blow from surging memory costs by drawing on stockpiled inventory, but Cook said that the buffer was fading and shortages of processors were keeping it from meeting strong demand for iPhones and Macs.

Its forecast on Thursday for revenue growth of between 9% and 11% in the current quarter fell short of Wall Street's roughly 12% estimate, and softer growth in its services business also overshadowed otherwise strong June-quarter results.

Sales of the iPhone, Apple's cash cow

Bar chart showing Apple iPhone sales

Q1 FY24

$69.7 bln

$45.96 bln

$39.3 bln

$46.22 bln

Q1 FY25

$69.14 bln

$46.84 bln

$44.58 bln

$49.03 bln

Q1 FY26

$85.27 bln

$56.99 bln

$54.25 bln

Source: Company statementsJuby Babu

Thomson Reuters - 2025

SERVICES ‌WEAKNESS ⁠WORRIES INVESTORS

The services weakness worried investors as it came during a stretch of strong iPhone sales, which typically feed the business that takes a cut of App Store purchases and includes everything from Apple Music to Apple TV.

That slowdown could deepen if iPhone sales take a hit from a price increase that many analysts expect during the launch of the new lineup, which typically happens in September.

"Apple's leverage over the ⁠supply chain appears to be in question and it's not clear that AI is serving as any measurable tailwind to products or services, with its future monetization impact still uncertain," Morgan Stanley analysts said.

"In fact, one could argue App Store softness might even be a ⁠result of AI re-prioritizing customer time."

Still, some analysts said that the iPhone has weathered price hikes before without denting demand significantly and that a recent U.S. leasing deal with Klarna that offers monthly plans for Apple's devices could soften the blow.

At ⁠least four brokerages cut their targets for the company's stock price, while three raised. That moved the median view to $330, which is $3 lower than the last closing price, according to LSEG data. The stock has risen 22.7% this year as of Thursday's close.

Apple’s Forward P/E ratio vs. Magnificent 7 Peers

Apple sits in the middle of the Magnificent 7 valuation spectrum, offering a blend of resilient profits and moderate growth at a less demanding multiple than some high-growth AI leaders

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Apple tumbles as supply chain snarls mar forecast in Cook's last earnings as CEO

Apple stock has risen over 22% so far this year

Sales of the iPhone, Apple's cash cow

SERVICES ‌WEAKNESS ⁠WORRIES INVESTORS

Apple’s Forward P/E ratio vs. Magnificent 7 Peers

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