Shares of Apple tumbled by more than 9% on Friday following the iPhone-maker’s announcement of current-quarter sales guidance that fell short of Wall Street expectations. Sales growth in the September quarter is anticipated to range from 9% to 11%, falling slightly short of analysts’ expectations of approximately 12%. The outlook for gross profit margins also fell short of expectations. In addition to facing foreign exchange challenges, the company has encountered supply chain disruptions that have hindered its ability to satisfy demand for its sought-after devices. Concerns persist that this trend may extend into the ongoing quarter. Simultaneously, an increase in memory chip prices is expected to adversely affect profits.

“Memory constraints, component shortages, and FX headwinds are pressuring results, as we believe Apple has used most of its lower-priced inventory and is not as prioritized in the supply chain as previous cycles,” analysts said in a note. “We believe the component shortages are at leading edge nodes that are now being prioritized for AI over Apple products.” The firm has fallen behind many of its mega-cap peers in adopting AI and has chosen to allocate considerably less in capital expenditures towards this emerging technology. However, analysts have contended that the comparatively low levels of AI expenditure could imply that Apple will not encounter the same cash flow challenges as its prominent competitors. Against this backdrop, Apple’s stock had experienced the most significant year-to-date increase among its Magnificent Seven counterparts, rising by 22.7% and momentarily elevating its market capitalisation above $5 trillion earlier this week.

Counterpoint Research indicates that Apple is projected to increase its market share on an annualised basis in 2026 across its smartphone, personal computer, tablet, and smartwatch segments. In the June quarter, iPhone sales experienced a notable increase of approximately 21%, driven in part by the demand for the iPhone 17 model. Gross profits also increased, primarily attributable to the singular advantage of a $2 billion tariff refund. Meanwhile, Apple’s second-largest segment, Services, encompassing online subscriptions like iCloud and Apple Music, along with fees from the App Store, experienced a year-on-year sales growth of 12.1% to $30.74 billion, falling short of consensus estimates of $31.22 billion. It represented a deceleration in growth compared to the second quarter.

Meanwhile, sales in Greater China rose by 22.4% to $18.86 billion, falling short of expectations. This occurred despite data from Counterpoint Research indicating that Apple surpassed the broader market regarding smartphone shipments in China during the second quarter. Overall, the California-based group, under the leadership of CEO Tim Cook during his final earnings report, achieved earnings of $2.02 per share on revenue totalling $109.42 billion for the quarter. Analysts had anticipated earnings of $1.89 per share alongside revenue of $108.86 billion. The bottom line was bolstered by a positive effect from tariff refunds.