Jefferies analyst Edison Lee downgraded the funding financial institution’s ranking on Apple’s (AAPL) inventory to Underperform and decreased his worth goal by 13% to $200.75 on Monday. Loop Capital additionally downgraded Apple’s inventory from Purchase to Maintain, with a revised worth goal of $230, down from $275.
In an investor observe, Lee stated 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 an absence of curiosity in AI amongst customers.
Shares of Apple fell as a lot as 3.7% noon on Tuesday. The inventory is up 16% during the last 12 months. Huge 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 quite a lot of 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 bother in China. General iPhone market share fell roughly 1% yr over yr in This autumn to 23%, in keeping with estimates by Canalys and IDC. That’s even supposing smartphone shipments rose 3%, Canalys stories.
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 concern, Lee contends, is that the corporate’s massive 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 should throw chilly water on the AI gross sales enhance.
Apple started rolling out Apple Intelligence in batches in October. It’s a dangerous transfer for Apple, which usually debuts its newest and biggest services at one time by way of massive, splashy launch occasions. That makes it tough for purchasers to know when the platform will characteristic all the 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 a large gross sales push from tech giants starting from Apple and Google to Microsoft and Intel.
Apple’s iPhone is its most essential product, and China is amongst its most essential 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 Companies division, introduced in $96.1 billion.
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