Apple’s stock took a sharp hit, plunging over 7% on August 3, marking its worst daily drop in more than a year. The catalyst was a softer-than-expected revenue forecast for the upcoming quarter, which rattled investors despite strong recent earnings.
The tech giant posted fiscal third-quarter revenue of $109.4 billion, a 16% increase from last year, and earnings per share climbed to $2.02, beating Wall Street’s $1.89 prediction. However, guidance for the fourth quarter fell short of analyst expectations. Apple projected revenue growth between 9% and 11%, implying sales around $113 billion, below the $114.9 billion forecast.
Supply Constraints and AI Costs Weigh on Future
CEO Tim Cook sounded a cautious tone during the earnings call. He highlighted persistent component shortages, especially in memory chips, that will curb production of iPhones, Macs, and iPads through the September quarter. Cook described this squeeze as a "100-year flood on memory pricing," pointing to skyrocketing DRAM and NAND costs fueled by surging AI infrastructure demand. This bottleneck is tightening chip availability on a global scale.
Despite these headwinds, Apple's core hardware segments showed resilience. iPhone revenue surged 22% year over year to $54.3 billion, beating estimates, while Mac sales jumped 29% to $10.4 billion, well above expectations. Conversely, iPad revenue missed forecasts at $6.19 billion, and services revenue rose 12% to $30.7 billion, also trailing projections.
August’s earnings marked the last full quarter under Tim Cook’s leadership after 15 years at the helm. He will hand over the CEO role to hardware chief John Ternus on September 1. The transition comes as Apple ramps up investment in AI, with R&D spending increasing 32% year over year to $11.7 billion, signaling a push into generative AI hardware development.
This material is for informational purposes and does not constitute financial advice.
