Apple shares fell more than 9% on Friday after the company issued a September-quarter sales forecast that failed to meet Wall Street expectations.
The weaker outlook overshadowed better-than-expected quarterly revenue and profit, raising fresh concerns about supply constraints, rising component costs and Apple’s future growth.
Apple Sales Forecast Disappoints Investors
Apple expects revenue to increase by between 9% and 11% during the September quarter.
Analysts had forecast growth of approximately 12%, leaving the company’s guidance slightly below market expectations.
Apple’s projected gross profit margin also disappointed investors, adding to the pressure on its share price.
Supply Chain Problems Pressure Apple
The iPhone maker continues to face supply chain disruptions that have made it harder to satisfy demand for its devices.
Investors are concerned that component shortages could continue during the current quarter and limit Apple’s ability to increase sales.
Foreign exchange movements are also creating difficulties. A stronger U.S. dollar can reduce the value of revenue generated in overseas markets when it is converted back into dollars.
Rising Memory Chip Costs Threaten Margins
Higher memory chip prices are expected to place additional pressure on Apple’s profitability.
Barclays analysts said the company may have already used most of its cheaper component inventory. As a result, Apple could now be more exposed to rising market prices.
The analysts also suggested that Apple may not receive the same level of supply chain priority it enjoyed during previous product cycles.
According to Barclays, shortages involving advanced semiconductor technology may be particularly challenging. Chip manufacturers are increasingly prioritizing artificial intelligence products over components used in Apple devices.
Apple Takes a More Cautious Approach to AI Spending
Apple has invested less aggressively in artificial intelligence infrastructure than several other major technology companies.
The company has therefore lagged some of its mega-cap rivals in the rapid expansion of AI data centres, processors and computing capacity.
However, Apple’s more cautious approach may also provide a financial advantage.
Companies making large AI investments have faced rising capital expenditure and weaker free cash flow. Apple may avoid some of these pressures because it is spending less on infrastructure.
Apple Stock Had Outperformed Its Technology Peers
Before Friday’s sharp decline, Apple shares had produced the strongest year-to-date performance among the Magnificent Seven technology companies.
The stock had gained approximately 22.7% since the beginning of the year.
Earlier in the week, Apple’s market valuation briefly climbed above $5 trillion, highlighting the strong investor confidence that had supported the shares.
Apple Expected to Gain Market Share
Counterpoint Research expects Apple to increase its market share across several product categories in 2026.
The company is projected to strengthen its position in smartphones, personal computers, tablets and smartwatches.
This outlook suggests that demand for Apple products remains resilient despite supply chain difficulties and rising competition.
iPhone Sales Jump 21%
Apple’s iPhone revenue increased by approximately 21% during the June quarter.
Strong demand for the iPhone 17 contributed to the increase and helped Apple deliver better-than-expected overall results.
Gross profit also rose during the quarter. However, the improvement was supported by a one-time tariff refund worth approximately $2 billion.
Without that benefit, Apple’s underlying profitability would have been weaker.
Services Revenue Misses Expectations
Apple’s Services division recorded revenue of $30.74 billion, representing annual growth of 12.1%.
The segment includes subscriptions and digital products such as iCloud, Apple Music and fees collected through the App Store.
Despite the double-digit increase, Services revenue fell below analysts’ consensus estimate of $31.22 billion.
The division also grew at a slower pace than it did during the previous quarter.
Greater China Sales Rise but Miss Forecasts
Revenue from Greater China increased by 22.4% to $18.86 billion.
However, the result still came in below Wall Street expectations.
The weaker-than-anticipated figure contrasted with Counterpoint Research data showing that Apple’s smartphone shipments in China outperformed the broader market during the second quarter.
China remains a strategically important market for Apple, making future sales trends in the region a key focus for investors.
Apple Beats Quarterly Revenue and Profit Estimates
Apple reported earnings of $2.02 per share on quarterly revenue of $109.42 billion.
Analysts had expected earnings of $1.89 per share and revenue of approximately $108.86 billion.
Although both figures exceeded forecasts, the company’s profit was supported by the favourable effect of tariff refunds.
Investors therefore focused more heavily on Apple’s weaker forward guidance and the risks facing its profit margins.
Tim Cook Oversees Final Earnings Report
The earnings announcement was also notable because it was the final quarterly report overseen by Apple CEO Tim Cook.
His departure marks a significant leadership transition for the California-based technology company.
Overall, Apple delivered stronger-than-expected quarterly results, supported by solid iPhone demand and growth in China. However, weaker sales guidance, component shortages and rising chip costs raised doubts about the company’s performance in the September quarter.
