Apple shares fell nearly 10% on Friday after a disappointing forecast showed that the iPhone maker was struggling to secure enough components as the AI-driven data center boom strains global supply chains.

The drop, if sustained, would mark the stock’s worst day since the pandemic-driven selloff in March 2020. It would erase nearly $500 billion from Apple’s market capitalization and return the crown of the world’s most valuable company to AI chip giant Nvidia, days after reclaiming it.

Tim Cook, ‌widely hailed as ⁠a supply-chain ⁠genius, called the shortages “very significant” and said Apple had limited options to address them, speaking on his final earnings call as CEO before handing the reins to John Ternus in September and becoming executive chairman.

“If even at Apple’s scale they are saying they are out all supply chain flexibility, it’s really bad for everyone,” said Ben Bajarin, CEO of tech consultant Creative Strategies.

Big Tech has been scooping up advanced chip-making capacity and memory chips to power its AI data centers, sparking shortages and price increases that are expected to shrink both the personal ⁠computer and ‌smartphone markets this year.

Apple had cushioned some of the blow from surging memory costs by drawing on stockpiled inventory, but Cook said that the buffer was fading and shortages of processors ⁠were keeping it from meeting strong demand for iPhones and Macs.
Its forecast on Thursday for revenue growth of between 9% and 11% in the current quarter fell short of Wall Street’s roughly 12% estimate, and softer growth in its services business also overshadowed otherwise strong June-quarter results.

SERVICES WEAKNESS WORRIES INVESTORS

The services weakness worried investors as it came during a stretch of strong iPhone sales, which typically feed the business that takes a cut of App Store purchases and includes everything from Apple Music to Apple TV.
That slowdown could deepen if iPhone sales take a hit from a price increase that ‌many analysts expect during the launch of the new lineup, which typically happens in September.

“Apple’s leverage over the supply chain appears to be in question and it’s not clear that AI is serving as any measurable tailwind to ⁠products or services, with its future monetization impact still uncertain,” Morgan Stanley analysts said.

“In fact, one could argue App Store softness might even be a result of AI re-prioritizing customer time.”

Still, some analysts said that the iPhone has weathered price hikes before without denting demand significantly and that a recent U.S. leasing deal with Klarna that offers monthly plans for Apple’s devices could soften the blow.

At least four brokerages cut their targets for the company’s stock price, while three raised. That moved the median view to $330, which is $3 lower than the last closing price, according to LSEG data. The stock has risen 22.7% this year as of Thursday’s close.

Federal Reserve Chairman Kevin Warsh‘s emphatic declarations on Wednesday that inflation would be brought down without signaling a readiness to raise interest rates triggered a sharp selloff in bonds that may force a hard choice: defying President Donald Trump’s desire for easier monetary policy or battling a growing cadre of fellow U.S. central bankers determined to tighten it.

Complicating matters was Warsh’s hint that he may try to switch up the Fed’s yardstick for successfully containing inflation, for years defined as a 2% year-over-year rise in the Personal Consumption Expenditures Price Index. “That’s our number, we’re sticking with it,” Warsh said in a press conference after the end of a two-day policy meeting, before adding, “Who ‌knows, come after next January, ⁠what we might ⁠say about strategy. I suspect the task forces might have something to add.”

Warsh handpicked 15 outside experts in May to deliver recommendations by the end of 2026 on the Fed’s conduct of monetary policy, including its inflation framework. Warsh said on Wednesday he will check in with them in the next couple of weeks and may share any thoughts that are “ready for prime time” at the Fed’s global central bankers’ conference in Jackson Hole, Wyoming. Past Fed chiefs have used that late-August meeting to prefigure what the central bank may do at its meetings in September. Warsh has so far stuck to his promise to provide no guidance on the Fed’s likely rate path. The combination of Warsh’s repeated assertions of the need to tame inflation with no action to move it toward the 2% target and a hint that the goalposts themselves may change helped send 30-year Treasury yields above 5.2% on Wednesday, a 19-year high. They extended their rise on Thursday.

“That’s almost seen in that building as the markets voting ‘no ⁠confidence’ on ‌the Fed and the Fed’s willingness and capacity to bring inflation down,” said Nathan Sheets, the global chief economist at Citigroup. “He highlighted a problem and gave no strategy for solving it other than, ‘I’m a hawk, trust me,’ and the markets wanted more than that,” said Sheets, who worked at the Fed for 18 years. “I think part of it is ⁠if you lean too far into future hikes, then he’s disappointing the White House. And it is a balancing act between Warsh the hawk, which he is, and trying to stay on sides relative to 1600 Pennsylvania Avenue.” Sheets said Warsh will need to make a choice by September.

THE BREWING STORM

Warsh’s colleagues are already calling for action. Three of the Fed’s 12 voting policymakers dissented on Wednesday against the decision to leave the central bank’s benchmark interest rate on hold in the 3.50%-3.75% range. On Friday they and any others at the table are free to have their say, and analysts expect a deluge of commentary, given what Sheets called the “absolute red flag” of rising long-term bond rates. “While Warsh may try to constrain the Fed’s official communications and substitute ‘talk’ for action while waiting for ‘task forces’ to return a verdict, the regional Fed presidents, and perhaps members of the Board (of Governors), are willing to discuss their views in the open and will be doing so over the next few days and weeks,” said Thierry Wizman, global FX & rates strategist at Macquarie Group. “We ‌expect them to do a lot of damage control, and to highlight how they, if not Warsh, are ready to tighten policy.” Before the Fed’s meeting this week, some policymakers including two of those who dissented on Wednesday – Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack – had signaled their discomfort with leaving rates unchanged despite rising inflation. Others who voted with Warsh on Wednesday to keep rates on hold, including ⁠Fed Governors Christopher Waller and Lisa Cook, have said they too may call for rate hikes if they don’t see improvement in inflation soon. The U.S. Bureau of Economic Analysis reported on Thursday that PCE inflation eased in June to 3.7% from 4.1% in May, and underlying core inflation rose 3.3% last month after advancing 3.4% in May. The slight improvement had been widely anticipated after the release of other inflation data earlier this month, and policymakers have said they are worried about renewed upward price pressures due to the ongoing Middle East conflict and surging investment in technology related to artificial intelligence. Business spending on equipment increased at a 15.2% pace in the second quarter, the BEA said in a separate report on Thursday, marking a second straight quarter of double-digit growth. Trump so far has refrained from attacking Warsh for not delivering lower rates, blaming the new Fed chief’s fellow board members instead. “Board members have put Warsh on notice they intend to push for a hike in September if inflation does not meaningfully ease over the summer,” Tim Duy, chief U.S. economist at SGH Macro Advisors, wrote in a note. “If Warsh is indeed a dove in hawk’s clothing, he will not have as much support on the board to hold rates steady again in the face of persistently high inflation.”

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Mumbai: Banking credit to industry remained robust, increasing 19% year-on-year due to broad-based growth from both large and small companies. Personal loan growth also remained strong, expanding 16% YoY compared to 12% a year ago, the latest sectoral data for June showed.

In the personal loan segment, loans against gold jewellery, which include certain agriculture loans, remained the fastest-growing sector, surging 93% YoY, data published Friday by the Reserve Bank of India (RBI) showed. Vehicle loans with a 17% growth were the second-fastest in the personal loan segment. Credit card outstanding growth decelerated to 2% compared to 7% recorded a year ago.

Growth in education loans also remained strong at 13% versus 14% recorded a year ago.

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