Apple Shares Drop 7% as Cook Warns of Supply Constraints
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Apple shares dropped 7%+ in after-hours trading after Tim Cook warned of "significant" supply constraints expected to spread from Macs to iPhones and iPads, saying the company would be "scrambling" next quarter.
- Apple posted $109b in quarterly revenue (up 16%) and $29b in profits (up 26%), with iPhone sales up 22% and Mac sales up 25% on unexpectedly high demand; the iPhone 17 launch was Apple's biggest ever.
- Cook insisted the constraints are "not a regular supply issue" but a demand forecast problem, as chip bottlenecks center on advanced-node microprocessors manufactured primarily by Taiwan-based TSMC.
- Apple received roughly $1.1b in tariff refunds that lifted gross margins by 2% and will reinvest them alongside a previously announced $600b commitment to US domestic manufacturing over four years.
- Amazon shares climbed 10% after-hours as AWS posted 37% growth — its best quarter in four years — with overall revenue at $200b and profits doubling to $63b, despite $7.6b in negative free cash flow.
- Amazon raised its annual AI spending target to $220b, up from $200b just three months ago, while Forrester analyst Tracy Woo warned that capacity additions in 2027-2028 could become "economic exposure."
- Cook described the upcoming Siri AI relaunch as "an enormous opportunity," positioning on-device processing as a "competitive weapon" against chatbots from OpenAI and Anthropic.
Why it matters: Apple's constraint is paradoxically its own success: iPhone 17 demand is outstripping TSMC's advanced-node chip output, threatening to cap revenue at the moment of Apple's strongest product launch ever. The $1.1b tariff refund windfall and $600b US manufacturing pledge offer partial insulation, but Cook's warning of "scrambling" next quarter reframes a supply chain story as a demand story.
