Supply Shortage Takes Bite Out of Apple: 8 Key Items Shaping the Stock Market Friday

These are the early headlines and other items poised to influence the market at the start of trading Friday. As we share this collection of market drivers, futures point to a positive start to the final day of trading for the week.

1. Global equity fund inflows rose to their highest in three weeks during the week to July 29, as investors snapped up technology sector funds during a market downturn, anticipating that ‌the AI-driven advance has further to go. (Reuters) U.S. President Donald Trump said talks in Cairo between mediators and Hamas leaders on Thursday have led to a phased disarmament agreement in Gaza, but a Hamas official described the deal as a draft and U.S. officials said Israel was skeptical the militant Palestinian group would surrender its weapons. (Reuters) President Donald Trump convenes a Cabinet meeting on Friday at his Camp David retreat as he grapples with how to resolve his war against Iran and bring down gasoline prices ‌that are threatening Republicans in November midterm elections.

Those inflows mixed with the market’s reaction to Amazon’s (AMZN) quarterly results and guidance (more on that below), and the unwinding of positions at Situational Awareness look to lift the market this morning, continuing yesterday’s rebound.

While we cheer that and the impact on the Pro Portfolio as we move past multiple hurdles for the market this week, let’s not lose sight of the ones that remain. Those include renewed inflation and supply chain pressures, and the uncertain path to resolving them in the near-term. Once again, we’ll be monitoring weekend developments, including the outcome of the OPEC+ meeting that is expected result in higher oil production levels come September.

2. Euro-area inflation picked up in July after the collapse of a US-Iran ceasefire boosted oil prices, reinforcing expectations that the European Central Bank will need to raise interest rates again. Consumer prices increased an annual 2.9% after 2.8% in June, Eurostat said on Friday… For the moment, signals from the Middle East are mixed, after shipping through the Strait of Hormuz picked up recently even as the US and Iran returned to exchanging air strikes. Oil prices — while back below $100 a barrel — remain elevated. (Bloomberg)

That data point reinforces our view to look through the drop in the June PCE Price Index published yesterday and focus on the Prices components of July Manufacturing and Services PMI from ISM and S&P Global next week. While those figures may not jump back to levels posted in April and May, their month-over-month movement will likely influence July CPI and PPI expectations.

3. Aggressive AI spending plans by Amazon.com Inc., Microsoft Corp. and Alphabet Inc. provided fresh evidence that demand for chips and related equipment will remain strong, offering relief to a sector that’s been battered in recent days. Amazon boosted its forecast for full-year capital expenditures to $220 billion on Thursday, up from a previous estimate of $200 billion. And Chief Executive Officer Andy Jassy said most of that spending will go toward artificial intelligence. (Bloomberg) Amazon delivered its strongest cloud growth in more than four years and raised its annual capital spending forecast, bolstering its argument that heavy investment in AI is generating sufficient demand to warrant the outlays. The results helped answer a key question hanging ‌over Amazon and its Big Tech peers: whether hundreds of billions of dollars being poured into AI data centers and chips are producing adequate returns. (Reuters)

Similar to what we saw from Microsoft (MSFT), Amazon (AMZN) reported accelerating revenue growth and solid margin expansion for its cloud segment in Q2 2026, bringing additional relief to concerns about the AI and data-center buildout. Backlog at Amazon Web Services (AWS) climbed to $496 billion at the end of the quarter, up dramatically from $364 billion exiting March, which points to rising AI adoption and expanding usage and alleviates questions over the step up in the company’s capex levels.

During Amazon’s earnings call, management reminded investors that data-center capital is spent up to two years before monetization can begin, but generates revenue immediately upon opening. Management also addressed the market’s concern over AI spending and free cash flow saying, “As we get a few years out and the revenue growth outpaces the incremental CapEx growth which will happen at some point, the resulting revenue, free cash flow and return on invested capital is very compelling.”

Amazon also shared that the revenue run rate for its chips business, which includes Trainium and Graviton chips, is over $25 billion and grew triple digits year over year in the quarter. That is a very, very nice shot in the arm for the Portfolio’s positions in Marvell (MRVL) and Broadcom (AVGO).

We’ll have more complete Amazon thoughts and our takeaways in a standalone note later this morning.

4. Apple shares dropped 7.3% before the bell on Friday as the tech giant warned that supply constraints would hurt growth, prompting investors to look beyond near-term shortages to gauge the hit from ‌an expected iPhone price hike… The company’s outlook highlighted a broader industry challenge, with AI-driven demand tightening supplies of advanced chips and memory, driving up costs and prolonging supply-chain bottlenecks across the technology sector. (Reuters) Apple said sales for its fiscal third quarter ended June 27 rose 16.4% to $109.42 billion, compared with analyst estimates of a 15.5% rise, according to LSEG data. Customers snapped up iPhones and MacBooks while prices increased across the consumer electronics sector. Third-quarter profits were $2.02 per share, with 11 cents attributable to tariff refunds from the U.S. government. Excluding the refunds, profits still beat Wall Street estimates of $1.89 per share. Driving results was a 21.7% increase in iPhone sales to $54.25 billion, above estimates of $53.86 billion… Apple’s second-biggest revenue area, its services business, rose 12.1% to $30.74 billion, missing estimates of $31.22 billion. (Reuters)

Several months ago we discussed our concerns over memory and other component constraints as companies such as Micron (MU) shifted capacity to meet AI and data-center demand at the expense of PCs and other end markets. We also suspected there would be a pull forward in demand by consumers and businesses ahead of potential shortages but also higher prices as OEMs looked to protect margins and pass through those higher component costs. We are seeing that flow through the system as showcased by Microsoft’s current quarter guidance for its More Personal Products segment.

What’s different with Apple (AAPL) is the pending launch of new iPhone models alongside the overhauled Apple Intelligence and Siri AI. Morgan Stanley estimates that more than 850 million active iPhones are incapable of running basic Apple Intelligence queries, while over 1.3 billion devices cannot use the most advanced AI-powered Siri features. That suggests the potential for a massive upgrade cycle provided the upcoming iOS 27 software release delights exiting iPhone users and wins over current Android ones.

And yes, they will likely carry higher price tags, but taking this into account Apple recently launched its Apple Upgrade program, which is a new program provided by Klarna (KLAR) that spreads payments for Apple products between 12-36 months depending on the product.

Recognizing that potential, we will remain AAPL shareholders despite the setback we’re likely to see in the shares today. We’ll have more complete Apple thoughts and our takeaways in a standalone note later this morning.

5. … some Tesla executives have been told to prepare for a separation of the China business ahead of a potential merger, a person familiar with those talks said. And Tesla advisers have discussed possible options for a separation, including a spinoff, sale or closure, another person said. (WSJ)

This will certainly fuel speculation about an eventual merger between Tesla (TSLA) and SpaceX (SPCX) even though Elon Musk quickly dismissed the report as “fake news.” If a merger between the two companies were to be pursued, it would face both geopolitical and regulatory hurdles because SpaceX is a major U.S. defense contractor involved in national security and satellite programs. That means some cleaving off of Tesla’s China business would be a likely first step down that path.

6. Anthropic has disclosed that its Claude AI models hacked into three organisations while the start-up was testing cyber capabilities, a week after OpenAI reported a similar incident. The group said Claude gained unauthorised access to outside companies during an evaluation of its cyber-offensive tasks. “A misunderstanding” gave Claude access to the internet in its testing environment, when it was meant to be blocked, Anthropic said. (FT)

On the heels of rogue OpenAI agents hacking multiple companies, the above bolsters our case for cybersecurity being a part of every investor’s portfolio. Yesterday, we added further to the Portfolio’s First Trust Nasdaq Cybersecurity ETF (CIBR) position.

7. Economic data today per TipRanks: Employment Cost Index (Q2 2026), Chicago PMI (July), University of Michigan Consumer Sentiment Index (July Final).

8. Companies reporting today per TipRanks: AM – AbbVie (ABBV), AutoNation (AN), Cboe Global Markets (CBOE), Chevron (CVX), Colgate-Palmolive (CL), Dominion Energy (D), Eaton (ETN), Exxon Mobil (XOM), Lear (LEA), and Linde (LIN).

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At the time of publication, TheStreet Pro Portfolio was long AAPL, AMZN, AVGO, CIBR, MRVL, MSFT, and MU.