Apple drops 10% on supply crunch as Nvidia reclaims top spot
Apple's warning that AI infrastructure demand is starving its consumer hardware of critical components signals a broader margin squeeze across the electronics sector and cedes the most valuable company title to Nvidia.
Apple shares plunged almost 10% on Friday after a weak revenue forecast exposed severe component shortages. The selloff threatens to erase roughly $500 billion from the iPhone maker's market capitalisation, marking its steepest single-day decline since March 2020. The drop immediately paves the way for Nvidia to reclaim its position as the world’s most valuable company, just days after Apple had briefly overtaken it.
The root cause is a global supply chain bottleneck driven by the massive buildout of artificial intelligence data centres. Big Tech companies are aggressively buying up chips and memory for AI infrastructure, creating a visible shortage that is now spilling over into the consumer electronics market. This sudden reallocation of critical components has left traditional hardware makers scrambling for allocation.
Apple had previously managed to cushion the blow from surging memory costs, but Tim Cook warned that this buffer is fading. On his final earnings call as CEO before becoming executive chairman and handing control to John Ternus in September, Cook described the shortages as "very significant." He conceded that the company has limited options to tackle them, noting processor shortages are actively preventing Apple from meeting strong demand for iPhones and Macs.
The supply constraints carry significant implications for the broader technology sector. "If even at Apple's scale they are saying they are out of all supply chain flexibility, it's really bad for everyone," said Ben Bajarin, chief executive of tech consultancy Creative Strategies. The scarcity is already forcing higher prices for PCs and smartphones across the industry, a dynamic that threatens to compress hardware margins globally.
For the current quarter, Apple projected revenue growth of 9% to 11%, falling short of the roughly 12% expansion anticipated by Wall Street. That muted outlook, compounded by softer growth in the company's typically resilient services division, overshadowed otherwise strong June-quarter results. Investors are now pricing in the reality that even the most sophisticated supply chains cannot easily absorb the raw material demands of the AI boom.
