Apple Raises Guidance, Chips Constrained

Apple just smashed expectations with $111 billion in revenue and surging iPhone sales, especially in China, even as advanced chip shortages threaten to choke supply. Management is guiding to double-digit growth next quarter, but there’s a catch: those record numbers are bumping up against real-world limits. Chipmaker TSMC’s most advanced nodes, the same tech powering AI hardware, are now a bottleneck for Apple’s hottest products, squeezing margins even as demand stays “off the charts.” With memory costs set to jump and gross margin guidance drifting lower, the pressure is on to see if Apple’s premium pricing can hold the line as supply gets tighter.

But the pressure isn’t just in hardware. Apple’s App Store faces court-ordered changes that could shrink the fees it collects from in-app purchases, just as hardware profitability is under fire. The Ninth Circuit is forcing Apple to allow developers to steer users to external payment options, with more legal and regulatory headaches looming. Meanwhile, Mac pricing is on the rise—with the cheapest Mac mini discontinued, and the MacBook Neo’s supply not keeping up—leaving a gap for Chromebooks to fill if Apple can’t deliver for students and schools by fall.

All this as Apple boosts buybacks, drops its net cash neutral goal, and ramps up R&D spend. Insights from Tim Cook, CFO Kevan Parekh, and eMarketer’s Jacob Bourne connect the dots on whether Apple’s AI and services moves can offset margin headwinds and legal friction.

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