Tim Cook signed off on his final Apple earnings call with a warning about a ‘hundred year flood’ in memory chip pricing

As Apple CEO Tim Cook prepares to hand over the reins to John Ternus in September, the tech giant's latest earnings call has painted a stark picture of the challenges facing the company. Despite Cook's optimism about the future, the company's supply chain constraints and soaring memory chip prices are set to impact sales of iPhones and Macs in the months ahead, sending shares plummeting by as much as 8% in after-hours trading.

Background & Context

With a market cap of $4.9 trillion, Apple has been one of the best performers among Big Tech stocks this year, with its shares up 23% in 2026. However, the company's growth has been tempered by its late entry into the AI game, with investors previously expressing concerns about the capital expenditures required to keep pace with the likes of Meta, Google, and Amazon.

However, Apple's business model has proven to be a more sustainable and profitable option, with the company not being locked into the AI infrastructure arms race. This has allowed Apple to avoid the massive capital expenditures that have weighed heavily on its peers, with Alphabet's stock plunging 7% last week after it raised its capex forecast to above $200 billion and reported its first ever negative free cash flow.

Key Details

During the earnings call, Cook acknowledged the significant constraints currently facing the company, with limited flexibility in the supply chain. He warned that the company would be "scrambling" to meet demand in the current quarter, with sales of the iPhone expected to grow at a "mid-teens" percentage rate, a significant deceleration from the 22% growth posted in the recently ended quarter.

Total revenue in the current quarter is expected to grow between 9% and 10% year-over-year, below the 12% rate expected by analysts. Gross profit margins, which came in at 48% of revenue (excluding the benefit of tariff refunds) in the most recent quarter, will also come under pressure in the current quarter.

Cook's comments were echoed by other executives, who painted a picture of a company facing severe supply constraints that will impact sales of iPhones and Macs in the months ahead. The supply crunch is making it more difficult for Apple to obtain the advanced processors it needs for its phones and computers, translating into lower revenue and profit margins.

What Experts Say

The warning signs for Apple's supply chain constraints and soaring memory chip prices have been evident for some time, with the company forced to raise prices of its Macs and iPads in June to account for the increased cost of memory chips. The demand for memory chips in the data centers being built to power AI is causing a shortage and sending prices skyrocketing, with Cook describing it as a "hundred year flood" in memory chip pricing.

Analysts have long warned that the AI arms race would have far-reaching consequences for the tech industry, with companies like Apple, Google, and Amazon competing for market share and talent in the AI space. While Apple's business model has proven to be more sustainable and profitable, the company is still feeling the effects of the AI arms race, with memory chip prices being a major headache.

Key Takeaways

• Apple's supply chain constraints and soaring memory chip prices are set to impact sales of iPhones and Macs in the months ahead.
• The company's revenue and profit margins will come under pressure in the current quarter, with total revenue expected to grow between 9% and 10% year-over-year.
• Cook's comments highlighted the significant challenges facing Apple, with the company's limited flexibility in the supply chain and scrambling to meet demand in the current quarter.
• The "hundred year flood" in memory chip pricing is a major concern for Apple, with the company forced to raise prices of its Macs and iPads in June to account for the increased cost of memory chips.

What This Means For You

For everyday readers, the implications of Apple's supply chain constraints and soaring memory chip prices are clear: expect higher prices for iPhones and Macs in the months ahead, and a possible deceleration in sales growth for the company. While Cook's optimism about the future is reassuring, the challenges facing Apple are real, and investors will be keeping a close eye on the company's progress in the coming months.

As Apple continues to navigate the complex landscape of the tech industry, one thing is clear: the company's ability to innovate and adapt will be key to its success in the years ahead. With Cook's legacy as CEO set to come to an end in September, the stage is set for a new era of leadership at Apple, with John Ternus taking the reins and promising to continue the company's commitment to innovation and customer satisfaction.