Apple suffers record $358B market cap loss on chip woes

Apple ↘ 0.80% shares fell 7.35% on Friday to $308.91, erasing roughly $358 billion in market capitalization in the company's largest single-day loss on record. The selloff came despite the tech giant reporting record fiscal third-quarter revenue of $109.4 billion and earnings per share of $2.02, as investors focused on a cautious outlook for the quarter ahead.whalesbook+2

Supply Constraints and Memory Costs Cloud the Forecast

Apple guided for fiscal Q4 revenue growth of 9% to 11%, below the 12.1% Wall Street consensus. CEO Tim Cook described supply constraints as "very significant," pointing to insufficient 3nm chip capacity that will simultaneously limit iPhone, Mac, and iPad shipments. CFO Kevan Parekh said rising DRAM and NAND memory prices — driven by surging demand for AI server infrastructure — more than fully explain the sequential gross margin decline into the 47% to 48% guidance range.tradingkey+4

The memory cost surge is expected to hit the upcoming iPhone 18 Pro series particularly hard, with estimates suggesting production costs could rise by $200 to $300 per device. Cook noted that delivery times for popular devices including the Mac mini and Mac Studio have already lengthened.interactivecrypto+1

A Beat Flattered by Tariff Refunds

Stripping away one-time factors, Apple's quarter was solid but unspectacular. Of the $0.13 EPS beat over consensus, $0.11 came from tariff refunds — accounting for roughly 85% of the outperformance. Excluding refunds, EPS was approximately $1.91 versus the $1.89 estimate, and gross margin was essentially in line at 48.1%.ts2+2

The services segment, which contributes 42% of gross profit at a 75.6% margin, grew 12.1% to $30.74 billion but missed expectations by nearly $500 million. iPhone revenue rose 21.7% to $54.25 billion and Mac surged 28.7% to $10.35 billion, but the high-margin services miss weighed more heavily on sentiment.tradingkey+2

Leadership Transition Adds Uncertainty

The results arrive as Apple prepares for a leadership change. Cook, who has led the company since 2011, is scheduled to hand the CEO role to hardware chief John Ternus on September 1. Ternus inherits record demand alongside a shrinking ability to fulfill it, a memory cost shock, and an AI strategy that has yet to prove it can drive upgrades.tradingview+1

Several analysts trimmed price targets following the report, though Morgan Stanley ↘ 0.89% and BofA Securities argued that supply constraints may defer rather than destroy revenue. D.A. Davidson analyst Gil Luria noted simply that "services growth was slowing."gurufocus+2