CUPERTINO, CALIFORNIA: Apple was on track to lose nearly $500 billion in market value on July 31 after warning that shortages of key components would weigh on growth, highlighting how the AI-driven race for chips is straining global technology supply chains.

Shares of the iPhone maker fell nearly 10%, putting the stock on course for its worst day since the pandemic-driven market selloff in March 2020. The decline would erase nearly $500 billion from Apple's market capitalization and hand the title of the world's most valuable company back to AI chipmaker Nvidia, just days after Apple reclaimed the top spot.

Speaking on his final earnings call as CEO before handing leadership to John Ternus in September and becoming executive chairman, Tim Cook described the supply shortages as "very significant" and said Apple had limited options to overcome them.

"If even at Apple's scale they are saying they are out all supply chain flexibility, it's really bad for everyone," said Ben Bajarin, CEO of tech consultant Creative Strategies.

Technology companies have been consuming advanced chipmaking capacity and memory chips to build AI data centers, triggering shortages and pushing up prices. Apple had softened the impact by relying on stockpiled inventory, but Cook said those reserves were running low and processor shortages were limiting its ability to meet demand for iPhones and Macs.

Apple forecast revenue growth of 9% to 11% for the current quarter, below Wall Street expectations of about 12%. Slower growth in its services business also overshadowed otherwise strong June-quarter results.

The slowdown in services concerned investors because the business typically benefits from strong iPhone sales through App Store purchases and subscriptions such as Apple Music and Apple TV. Analysts warned that the business could face additional pressure if Apple raises iPhone prices with its next product lineup, expected in September.

"Apple's leverage over the supply chain appears to be in question and it's not clear that AI is serving as any measurable tailwind to products or services, with its future monetization impact still uncertain," Morgan Stanley analysts said.

"In fact, one could argue App Store softness might even be a result of AI re-prioritizing customer time."

Some analysts noted that iPhone demand has remained resilient through previous price increases and said Apple's recent U.S. leasing partnership with Klarna could help soften the impact of higher prices. At least four brokerages cut their price targets for Apple, while three raised them, leaving the median target at $330, according to LSEG data. Apple's shares had gained 22.7% this year through July 30's close.