Apple's Stock Suffers Historic Plunge as Chip Shortage Clouds Tim Cook's Final Quarter as CEO

Apple's stock took its steepest one-day hit since the early days of the pandemic on Friday, sliding close to 10% after the company warned that a worsening components crunch is limiting how many iPhones and Macs it can actually build and sell.

The selloff, Apple's worst since the March 2020 crash, wiped out an estimated $450 billion to $500 billion in market value in a single session. It also cost Apple its brief reign as the world's most valuable company — a title it had only just reclaimed from Nvidia days earlier, with both companies trading in the $4.8-4.9 trillion range.

**A Supply Crunch Even Apple Can't Engineer Around ** The trigger wasn't weak demand — quite the opposite. Apple's fiscal third-quarter results, released Thursday, were strong on paper: revenue of $109.4 billion, up 16% year-over-year, with diluted earnings per share climbing 29% to $2.02. iPhone revenue rose 22% to a June-quarter record of $54.3 billion, and Mac revenue jumped 29% to $10.4 billion, also a record for the period.

What spooked investors was the guidance. Apple projected September-quarter revenue growth of just 9% to 11%, missing Wall Street's roughly 12% target. The company pointed to two headwinds: a 2.5-percentage-point currency drag, and tightening supply constraints across iPhone, Mac and iPad.

The root cause is a global scramble for chips and memory, driven largely by the buildout of AI data centers. Cloud and AI giants have been buying up advanced chip-manufacturing capacity and memory components at a pace that's squeezing every other device maker competing for the same supply. Apple has reportedly leaned on stockpiled inventory to soften the impact so far, but that cushion is running low.

Speaking on what will be his last earnings call before stepping down as CEO, Tim Cook did not mince words about the severity of the situation, describing the shortages as "very significant" and acknowledging Apple has few remaining levers to pull. Analysts noted the irony: Cook built his reputation on mastering Apple's supply chain, and if a company with Apple's scale and negotiating leverage says it has run out of flexibility, that's a warning sign for the entire consumer electronics industry.

Ben Bajarin, CEO of Creative Strategies, captured that sentiment, noting that Apple hitting the limits of its supply-chain maneuvering is a bad sign for everyone else competing for the same components.

**Services Growth Adds to Investor Unease ** Beyond the chip squeeze, Apple's services division — the high-margin business built on the App Store, Apple Music, Apple TV and related subscriptions — also gave investors reason to worry. Services revenue came in at $30.7 billion, up 12.1% year-over-year but below the roughly $31.2 billion analysts had expected. That's a notable soft spot given it arrived during a quarter of unusually strong iPhone sales, which normally feed services growth through App Store activity tied to new device activations.

Industry watchers expect the broader supply squeeze to weigh on both the smartphone and PC markets more generally this year, as manufacturers compete for a shrinking pool of advanced chips and memory.

**A Symbolic Handoff ** The timing adds a layer of drama to Apple's leadership transition. Cook is set to become executive chairman on September 1, handing the CEO role to John Ternus, Apple's longtime senior vice president of hardware engineering, who has been with the company since 2001 and played a central role in developing products including the iPhone and AirPods. Arthur Levinson will step into the role of lead independent director at the same time.

Cook is closing out his tenure atop Apple, not with a victory lap, but with a candid admission that even the industry's most disciplined operator is running into constraints it cannot simply engineer its way out of. Whether Ternus inherits a temporary supply bottleneck or a more structural shift in how AI demand reshapes the chip market is likely to be one of the first major tests of his leadership.

This article is an original editorial summary based on publicly reported information. It has been independently written for publication and does not reproduce content from any single source.