Despite strong iPhone demand and services revenue propelling Apple’s Q3 earnings, the tech giant’s shares have taken a southward direction. On Friday (July 31), it fell nearly 10%. On Monday (August 3), it went down by 7.35%.
The development has defied the overall Nasdaq trends, in which the shares of Apple’s industry peers like Nvidia, Microsoft, and Amazon have remained in the green zone.
Apple’s stock downfall came after the iPhone maker issued a disappointing forecast that showed the company struggling to secure enough components as the AI-driven data center boom strains global supply chains.
The drop, if it continues, may end up marking the stock’s worst time since the pandemic-driven selloff in March 2020. It would even erase nearly USD 500 billion from Apple’s market capitalization and return the crown of the world’s most valuable company to Nvidia. Apple reclaimed the title in the final week of July.
By July 27, Apple’s valuation stood near USD 4.9 trillion, while for Nvidia, the ratio was around USD 4.77 to USD 4.9 trillion. However, it was the highest among the AI chip makers. Google parent Alphabet came third with over USD 4.3 trillion, holding a major share in tech and search.
At least four brokerages cut their targets for the company’s stock price, while three raised them. That moved the median view to USD 330, which is USD 3 lower than the last closing price, according to LSEG data. The stock is witnessing the correction after rising 22.7% in 2026.
Talking about Apple’s latest earnings data, the iPhone maker, in its Q2, saw record-breaking numbers, as strong iPhone demand and revenue from its services were enough to address the global memory chip supply constraints to some extent.
Revenues stood at USD 109.4 billion—up 16% compared to 2025. Net profits, on the other hand, came in at USD 29.8 billion, which is a 27% lift from Q3, 2025.
On iPhones’ demand front, revenues reached USD 54.2 billion for the three-month period ending on June 27, 2026. The figure represents a 21% rise compared to the same time in 2025.
The services division, which covers Apple’s R&D activities on fronts like digital content, cloud, financial, and advertising, among others, continued its rise and hit the USD 30.7 billion mark. The tech giant also revealed having 1.5 billion paid subscriptions across its platforms.
Mac revenues saw a healthy 29% jump to USD 10.3 billion, while iPad sales were slightly down to USD 6.2 billion. The wearables, home, and accessories division saw a slight 7% bump up to USD 7.9 billion.
However, despite record-breaking numbers, component shortages, especially on the chip, are now weighing big time on the tech giant’s stock performance on the Nasdaq.
Outgoing CEO Tim Cook, often considered in the tech circle as a supply-chain genius, called the shortages “very significant.” His next prediction was grimmer, as he stated that Apple had limited options to address the issue. All eyes will be on John Ternus, who takes over the leadership reigns in September.
The primary reason behind the chip shortage is the Big Tech’s bid to scoop up advanced semiconductor-making capacity to power its AI data centers, sparking shortages and price increases that are expected to shrink both the personal computer and smartphone markets in 2026.
While Apple had cushioned some of the blow from surging memory costs by falling back on its stockpiled inventory, Cook said that the buffer was fading and shortages of processors were keeping it from meeting strong demand.
While Wall Street was estimating 12% revenue growth for Apple in Q3, the company now sees the ratio to stay between 9% and 11%, falling short of the analysts’ estimates.
The weakness in Apple’s services division has further 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.
Analysts see the slowdown deepening further if iPhone sales take a hit from a price increase that may arrive along with the launch of its new lineup 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. In fact, one could argue App Store softness might even be a result of AI re-prioritizing customer time,” Morgan Stanley analysts said.
Still, a section of the analysts has backed Apple to overcome the crisis. In the past, iPhones have weathered price hikes before without denting demand significantly. Also, they pointed out the recent US leasing deal with fintech Klarna to offer monthly plans for Apple’s devices, which could soften the blow to some extent.