Key Moments
- Apple shares fell 7.3% in premarket trading on Friday after the company warned that supply constraints would pressure growth.
- The projected revenue growth of 9% to 11% for the current quarter and mid-teens iPhone revenue growth both came in below Wall Street expectations.
- iPhone revenue in the June quarter rose 21.7% to $54.25 billion, surpassing estimates of $53.86 billion and setting a new third-quarter record.
Market Reaction and Valuation Impact
Apple shares dropped 7.3% before the opening bell on Friday after the company signaled that supply issues would constrain growth, pushing investors to look past short-term shortages and assess the impact of a widely anticipated increase in iPhone prices.
Based on the premarket decline, Apple was poised to lose approximately $361.6 billion in market capitalization if the losses persisted through the trading session.
Industry-Wide Supply Strain
The company’s latest outlook underscored a broader challenge across the technology industry. Rising demand tied to artificial intelligence has tightened availability of advanced chips and memory, elevating input costs and extending supply-chain disruptions throughout the sector.
Apple stated on Thursday that limited advanced chipmaking capacity was curbing supply of iPhones, Macs and certain iPad models. Chief Executive Tim Cook emphasized that supply restrictions, not soft demand, were responsible for the weaker growth outlook.
Leadership Transition at the Top
Cook is set to step down as chief executive and hand the role to John Ternus at the beginning of September. The transition will close a leadership period that saw Apple evolve into the world’s most valuable company and a leading constituent of the so-called “Magnificent Seven”.
Analyst Views on Demand and Deferred Sales
J.P. Morgan analysts led by Samik Chatterjee commented on the interplay between strong demand and supply challenges. They wrote, “Demand robustness is running into a wall of supply and cost challenges,” and argued that constrained supply was more likely to shift sales into future periods than to permanently erode them, with associated revenue expected to appear in subsequent quarters.
Guidance and Recent Performance
Apple guided for revenue growth of 9% to 11% in the current quarter, short of Wall Street’s expectation of roughly 12%. The company also projected iPhone revenue to grow at a mid-teens percentage rate, which similarly fell below analyst forecasts.
Despite the softer guidance, iPhone sales in the June quarter delivered strong results. Revenue from the device climbed 21.7% to $54.25 billion, beating market estimates of $53.86 billion and representing Apple’s highest-ever iPhone revenue for a third quarter.
| Metric | Reported/Forecast | Market Expectation |
|---|---|---|
| Premarket share move | -7.3% | Not stated |
| Implied market value loss (if decline holds) | $361.6 billion | Not stated |
| Current-quarter revenue growth outlook | 9% to 11% | About 12% |
| iPhone revenue growth outlook | Mid-teens percentage | Below analyst estimates |
| June-quarter iPhone revenue | $54.25 billion | $53.86 billion |
| June-quarter iPhone revenue growth | 21.7% | Not stated |
iPhone Pricing and Demand Sensitivity
Apple is widely expected to lift iPhone prices later this year, and investors are increasingly focused on whether the company can execute that move without undermining demand.
TD Cowen analysts said the forthcoming iPhone product cycle, enhancements to Siri powered by AI, and Apple’s existing upgrade program may provide room for higher price points. They noted that these factors could enable Apple to raise prices “without significant demand destruction.”
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