Apple Falls on Concerns Over Continued Growth, Chip Shortages

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Apple Inc. fell on concern from investors and analysts that the iPhone maker may not sustain growth in light of a blockbuster quarter and a tightening supply of chips for some of its devices.

Shares of the Cupertino, California-based technology giant fell as much as 1% Thursday, erasing a 2.6% intraday gain, despite the company reporting higher than expected revenue and profit across its product segments.

During a conference call Wednesday with analysts, Chief Executive Officer Tim Cook and Chief Financial Officer Luca Maestri said the company will see a negative $3 billion to $4 billion impact during the current quarter due to chip shortages hitting iPads and Macs, two product lines that gained popularity during the pandemic. The executives said semiconductor constraints and strong demand for the products are affecting the supply of the devices. Apple announced a new iPad Pro and a new iMac desktop with a company-designed M1 chip this month, but the products won’t begin shipping to consumers until the second half of May. The chip shortages are for “legacy nodes,” which cover components like in power supplies, Cook said on the call.

Apple didn’t provide a forecast for the fiscal third quarter citing continued Covid-19 concerns, but analysts, on average, estimated sales will jump 22% to $72.6 billion from the period a year earlier. Given the major growth over the last few months, analysts are concerned that the increase might be unsustainable.

“When and to what degree the strength in spending from the pandemic will unwind is clearly the key question,” Toni Sacconaghi, an analyst at Sanford C. Bernstein wrote in a note Thursday to investors. “We believe it may be difficult for Apple to grow in FY 22, and currently model revenues fractionally down in FY 22, but it could be worse.” He said the high average sales price of the iPhone could also be “unsustainable” as consumer may keep pricier phones for longer.

“Ironically, Apple’s Q2 may have been TOO good. Apple will be staring down very difficult comps in essentially every business in FY 22 and next year’s iPhone 13 cycle is likely to be evolutionary/more muted,” Sacconaghi wrote.

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