SAN FRANCISCO — Apple stock dropped 7.4 percent, closing at $308.91, even as the company reported higher quarterly revenues.
The sell-off reflects investor skepticism about Apple's ability to hold its profit margins as development costs rise and competition stiffens across its key product categories.
CEO Tim Cook, in his 13th year leading Apple, is under pressure to identify the company's next revenue engine. Past growth cycles ran on the iPhone, then the Services division.
Services, while expanding, carries lower gross margins than Apple's hardware. A continued revenue mix shift toward services would dilute overall profitability.
Apple's capital allocation strategy also draws scrutiny. The company has leaned heavily on share buybacks to lift earnings per share — a approach that faces harder questions when organic revenue growth slows.
Separately, major tech companies' avoidance of traditional initial public offerings continues to reshape how wealth is created in the sector. Many startups are staying private longer, sustained by large venture capital rounds. The trend reduces the number of high-growth firms entering public markets and cuts fee income for investment banks that underwrite IPOs. Private funding rounds frequently command higher valuations than public markets would assign comparable companies, shifting wealth creation from public shareholders to private and venture investors. The average time from founding to public listing has extended significantly, with many successful tech firms now waiting more than a decade before pursuing an IPO.
Chevron CEO Mike Wirth said the company is "firing on all cylinders, which is good, because the world needs it."
High energy prices hit large tech operators directly. Companies running extensive data centers for cloud computing and AI infrastructure face rising power costs that compress cloud margins.
