Jefferies analyst Edison Lee downgraded the funding financial institution’s ranking on Apple’s (AAPL) inventory to Underperform and decreased his value goal by 13% to $200.75 on Monday. Loop Capital additionally downgraded Apple’s inventory from Purchase to Maintain, with a revised value goal of $230, down from $275.
In an investor be aware, Lee mentioned he expects Apple to report lower-than-expected outcomes for its December quarter and a miss on expectations for the second quarter on weak iPhone gross sales and a scarcity of curiosity in AI amongst shoppers.
Shares of Apple fell as a lot as 3.7% noon on Tuesday. The inventory is up 16% during the last 12 months. Large Tech rivals Meta (META) and Alphabet (GOOG, GOOGL) are up some 36% and 30%, respectively, during the last yr, whereas Microsoft (MSFT) is up simply 3.5%. The broader S&P 500 has climbed 20% in the identical interval.
Based on Lee, iPhone gross sales in China fell between 15% and 20% yr over yr. Apple is contending with various headwinds within the area, together with the continued ascendence of native choices from Huawei and Xiaomi and cautious client spending amidst a slower financial backdrop.
Apple isn’t simply coping with hassle in China. Total iPhone market share fell roughly 1% yr over yr in This fall to 23%, in response to estimates by Canalys and IDC. That’s even if smartphone shipments rose 3%, Canalys reviews.
Jefferies forecasts that iPhone income will decline 0.4% yr over yr for the primary quarter, whereas whole Apple gross sales will develop 2.8%, decrease than the agency’s prior estimate of 4.6%.
A part of Apple’s challenge, Lee contends, is that the corporate’s large push into AI isn’t panning out as traders had hoped. Apple Intelligence, Apple’s synthetic intelligence platform for the iPhone, iPad, and Mac, was anticipated to kick off a gross sales supercycle. But when IDC and Canalys estimates show right, it’ll throw chilly water on the AI gross sales increase.
Apple started rolling out Apple Intelligence in batches in October. It’s a dangerous transfer for Apple, which typically debuts its newest and biggest services and products at one time by way of large, splashy launch occasions. That makes it tough for purchasers to know when the platform will function the entire capabilities Apple initially promised when it debuted Apple Intelligence in June 2024.
AI smartphones and their counterpart AI PCs are struggling to achieve traction regardless of an enormous gross sales push from tech giants starting from Apple and Google to Microsoft and Intel.
Apple’s iPhone is its most vital product, and China is amongst its most vital gross sales areas. In 2024, the iPhone accounted for $201.1 billion of Apple’s $391 billion in whole income. The corporate’s second-largest enterprise section, its Providers division, introduced in $96.1 billion.
