Apple Stock Falls Amid iPhone Supply Chain Constraints

Apple reported a 16.4% increase in fiscal third-quarter revenue to $109.42 billion, surpassing market expectations. The growth was driven by a record 21.7% surge in iPhone sales, which reached $54.25 billion during the period ending June 27. Despite these strong figures, Apple's stock fell 5.5% in after-hours trading. This decline followed a cautious revenue forecast of 9% to 11% for the upcoming September quarter. Wall Street analysts had previously projected a higher growth rate of 12%, leading to investor concerns over the company's near-term momentum.

Chief Executive Tim Cook described the current memory chip shortage as a hundred-year flood that has severely limited production flexibility. The company is struggling to secure advanced chipmaking technology required for its signature silicon processors, particularly for the Mac and iPad lineups. To manage rising component costs, Apple has already implemented price increases across its MacBook and iPad ranges. While the iPhone has been spared from price hikes thus far, analysts suggest a price increase is likely during the September launch event. Chief Financial Officer Kevan Parekh also noted that foreign exchange headwinds could impact growth by 2.5%.

The earnings call marked the final appearance of Tim Cook as CEO before his scheduled retirement after 15 years at the helm. John Ternus, currently the head of hardware engineering, is set to assume the CEO role on September 1. The transition occurs as Apple prepares to launch a redesigned Siri integrated with Google's Gemini AI technology. For Indian consumers, the supply crunch and potential iPhone price hikes could impact festive season sales. The company is evaluating alternative memory suppliers to mitigate the impact on its business margins, which currently sit at approximately 48.1%.