Apple supply bottlenecks, slowing growth mark Cook's final call

Apple warned that supply bottlenecks will crimp iPhone and Mac sales in the coming months, adding pressure on the company as it prepares for a leadership change. CEO Tim Cook said on his final quarterly earnings call that the company is "scrambling on the supply side."

Cook is stepping down in September. John Ternus, Apple's hardware chief, will take over. The supply chain constraints are limiting Apple's ability to get the advanced processors needed for its flagship devices. "We're seeing some very significant constraints currently, with limited flexibility in the supply chain," Cook said.

iPhone revenue growth is expected to slow to a "mid-teens" percentage pace this quarter, down from 22% last quarter. Overall sales growth is forecast at 9% to 10% year-over-year, below the 12% analysts had expected. Gross margins, which hit 48% of sales last quarter, are under pressure from component inflation and pricing adjustments.

Apple's stock fell as much as 8% in late trading Thursday before recovering to a 6% decline. The stock is up 23% in 2026, giving Apple a $4.9 trillion market cap. The company has been a standout performer among big tech peers, partly because it has avoided the massive AI infrastructure spending that has weighed on rivals like Meta, Google, Microsoft, and Amazon.

Memory component pricing is a major factor behind the margin squeeze. Cook called the situation a "100-year flood" on memory pricing. Unprecedented demand for memory chips from AI data centers has created shortages and driven up costs. Apple raised prices on Mac and iPad lineups in June to offset the higher expenses. The global DRAM market is dominated by three suppliers, Cook noted.

On the software side, Cook said processing AI features locally on devices offers a privacy advantage and could drive broader adoption of iCloud. Apple's Services division generated $30 billion in revenue last quarter, acting as a growth counterweight to hardware headwinds.

Financial results for the quarter ending June 30: revenue climbed 16% year-over-year to $109.4 billion, matching market expectations. Net income hit $29.8 billion, delivering $2.02 in earnings per share versus the $1.89 analysts projected. About 11 cents of that per-share profit came from a tariff refund under the Trump administration.

Ternus appeared on the earnings call to offer opening comments but did not participate in the executive Q&A session. One analyst tried to get him to answer a question; he declined. The company's next earnings call, scheduled for October, will be Ternus's first as CEO.

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