Apple suffers worst rout since 2025 on disappointing outlook

Apple Inc. suffered its worst stock decline in 16 months after component shortages weighed on the company’s sales forecast, signaling that industrywide supply constraints are taking a bigger toll than anticipated.

Revenue will rise 9 per cent to 11 per cent in the fiscal fourth quarter, which runs through September, the company said on a post-earnings conference call Thursday. Analysts had estimated growth of more than 12% in the period, which is likely to be the debut quarter for the next iPhone models.

Apple has been struggling to secure enough computer processors and counter fast-rising memory costs, a situation that forced the company to raise prices on Macs and iPads last month.

The supply crunch has also led to extended wait times on key computers like the Mac mini and Mac Studio. On the call, Chief Executive Officer Tim Cook said constraints would affect more Macs, iPhones and iPads in the current quarter. Currency fluctuations are hampering growth as well.

The disappointing forecast sent Apple shares down 7.4 per cent to $308.91 in New York on Friday, their biggest single-day drop since April 3, 2025.

Cook likened the memory cost issue to a “100-year flood,” while adding that the chip shortages were fueled by higher-than-expected demand for the iPhone and Mac. He specifically cited consumer interest in the iPhone 17 line and MacBook Neo, a new low-cost laptop.

Apple also said services growth would decelerate in the September quarter. And it warned of an impact from regulatory changes to its App Store business model in the European Union and elsewhere. New legislation allows developers to collect subscription payments directly, bypassing Apple’s fee. Gaming revenue was softer than anticipated, too.

In addition, the tech giant’s results showed weaker-than-expected revenue in China and from services during the June quarter. China sales amounted to $18.8 billion, short of the $19.6 billion estimated by some analysts.

Revenue from services grew a disappointing 12 per cent to $30.7 billion, compared with a $31.4 billion projection. That business includes Apple Music, the App Store, iCloud subscriptions, streaming video and other digital offerings.

The quarter serves as a swan song of sorts for Cook, who will hand the reins to hardware head John Ternus on Sept. 1. Cook, Apple’s leader since 2011, diversified the product lineup and increased annual sales to nearly half a trillion dollars.

The stock had been up 23% this year heading into the results, outpacing many tech peers. Apple had temporarily reclaimed its title as the world’s most valuable company in recent days — overtaking Nvidia Corp. — in part because it was seen as a safe haven from runaway AI spending. After briefly approaching the $5 trillion mark this month, the company’s current market value is now $4.5 trillion.

The iPhone, Apple’s biggest moneymaker, was a bright spot last quarter. The product’s revenue rose 22 per cent to $54.3 billion during the period, topping estimates of $53.6 billion. The numbers suggest that demand remains solid for the iPhone 17 series launched last September. The company also rolled out a new low-end 17e model in March.