Apple Sinks $500 Billion Amid Chip Shortages Clouding Growth Outlook

Apple's stock plummeted nearly 10% on July 31, putting the tech giant on track to lose $500 billion in market value. The decline would erase nearly half a trillion dollars from Apple's market capitalization and hand the title of the world's most valuable company back to Nvidia.

The warning came as Apple CEO Tim Cook described supply shortages as 'very significant' and said the company had limited options to overcome them. Cook spoke on his final earnings call before handing leadership to John Ternus in September and becoming executive chairman.

Ben Bajarin, CEO of tech consultant Creative Strategies, noted that even at Apple's scale, the supply shortages were a sign of broader issues: 'If even at Apple's scale they are saying they are out all supply chain flexibility, it's really bad for everyone.'

The supply chain strain is largely driven by AI-driven demand for chips. Technology companies have been consuming advanced chipmaking capacity and memory chips to build AI data centers, triggering shortages and pushing up prices.