Apple stated it’s dealing with extreme provide constraints that may have an effect on gross sales of iPhones and Macs within the months forward, underscoring the challenges looming over the corporate as Tim Cook prepares handy over the CEO reins.
In his final earnings call as CEO, Cook stated he has by no means been extra optimistic in regards to the alternatives forward for Apple. “I am beyond excited,” stated Cook, who has led the corporate for 15 years and can cross the CEO baton to John Ternus in September. But Cook’s confidence sooner or later stood in distinction to the image that he and different executives painted of present enterprise circumstances.
“We’re seeing some very significant constraints currently, with limited flexibility in the supply chain,” Cook stated. “There’s a quarter where we’re going to be scrambling on the supply side,” he acknowledged at one other level.
The provide crunch is making it tougher for Apple to acquire the superior processors it wants for its telephones and computer systems. And that interprets into decrease income.
Sales of the iPhone, which accounts for roughly half of Apple’s enterprise, will develop at a “mid-teens” proportion charge within the present quarter, Apple stated, forecasting a major deceleration from the 22% progress the iPhone enterprise posted within the not too long ago ended quarter. Total income within the present quarter will develop between 9% and 10% yr over yr, which was beneath the 12% charge anticipated by analysts.
Gross revenue margins, which got here in at 48% of income (excluding the advantage of tariff refunds) in the latest quarter, will come underneath stress within the present quarter, Apple stated.
Shares of Apple fell as a lot as 8% in after-hours buying and selling on Thursday following the earnings outcomes, earlier than regaining some floor, with the inventory later buying and selling down roughly 6% from its closing worth of $333.85.
Apple, the world’s most useful firm (market cap $4.9 trillion), has been the most effective performers amongst Big Tech shares this yr, with its shares up 23% in 2026. While Apple has been late to the AI recreation and struggled to develop its personal AI fashions, traders have come to understand that the corporate is just not locked within the AI infrastructure arms race that has swelled capital expenditures at Meta, Google, Microsoft, and Amazon.
Last week, Google father or mother firm Alphabet’s stock plunged 7% after it raised its capex forecast for the yr to above $200 billion and reported its first-ever unfavourable free money movement. Meta’s inventory took a similar drubbing this week.
While Apple is just not spending a whole bunch of billions in capex, its enterprise continues to be feeling the consequences of the AI arms race, particularly in the case of memory chips. The demand for memory chips within the information facilities being constructed to energy AI is inflicting a scarcity and sending costs skyrocketing.
In June, Apple was pressured to raise prices for its Macs and iPads to account for the elevated price of memory chips. “We did it because we’re in what I would characterize as a 100-year flood on the memory pricing,” Cook stated on Thursday’s earnings call.
He lamented that the DRAM memory chip market is actually owned by three corporations: Micron, SK Hynix, and Samsung. “If there were more suppliers that would be good. It would help us on the supply side, and perhaps the pricing side,” Cook stated, including considerably cryptically that Apple is “evaluating all options.”
Asked about Apple’s AI choices, together with the upcoming Siri AI, Cook stated the corporate noticed a possibility in working extra AI immediately on customers’ units, an method that Apple believes can enchantment to privacy-minded customers. “The ability to run some percentage of requests on-device is also very strategic, sort of a competitive weapon if you will,” Cook stated.
But he additionally famous that AI capabilities might result in a rise in customers of Apple’s iCloud providing—a possible increase to Apple’s Services enterprise, its second largest enterprise unit, with $30 billion in income final quarter.
Apple’s general income within the three months ended June 30 totaled $109.4 billion, up 16% yr over yr, and roughly in step with analyst estimates. The firm posted internet earnings of $29.8 billion, or $2.02 per share, versus the $1.89 EPS anticipated by analysts. Apple stated that roughly 11 cents of the EPS was attributed to a refund from President Trump’s tariffs.
As for incoming CEO John Ternus, although he was current for the earnings call, delivered ready remarks and was not made accessible for the Q&A portion. That didn’t cease one analyst from making an attempt for a response.
The analyst needed to know: How does Ternus view the aggressive panorama, particularly at a time when new opponents like SpaceX and OpenAI may very well be making ready to supply AI-powered hardware devices that may compete with Apple?
“I would just reiterate what Tim said,” Ternus famous. “There is so much opportunity for us, with everything that’s happening in the space. We’re just really focused on our plans, and really excited about it.”
