Apple's Stock Downgraded Amidst iPhone Sales Woes and AI Flop
Apple's stock has been downgraded by two prominent analysts due to concerns over declining iPhone sales and underperforming AI initiatives.
Jefferies analyst Edison Lee has lowered his rating on Apple (AAPL) to Underperform, citing weaker-than-expected iPhone sales, particularly in China, and a lackluster reception to the company's AI platform, Apple Intelligence. Loop Capital has also downgraded Apple's stock from Buy to Hold, with a reduced price target of $230.
According to Lee, China represents a significant challenge for Apple, with iPhone sales dropping by 15-20% year-over-year. The downtrend is attributed to the rise of local competitors like Huawei and Xiaomi, coupled with slower consumer spending.
Moreover, Apple's overall iPhone market share has declined by 1% year-over-year in Q4, despite a 3% increase in smartphone shipments industry-wide. This indicates that Apple is losing ground in the global smartphone market.
Jefferies forecasts that iPhone revenue will decline by 0.4% year-over-year in the first quarter, while total Apple sales growth will be lower than the firm's previous estimate. Lee suggests that Apple's heavy investment in AI is not yielding the expected sales boost.
Despite rolling out Apple Intelligence in October, customer adoption has been slow, potentially dampening the company's hopes for an AI-driven sales supercycle.
Apple's iPhone remains its flagship product, and China is a key sales region. However, the company has faced persistent difficulties in China, with sales declining in both 2023 and 2024.
Despite the headwinds, Apple is expected to release a new iPhone SE in the coming months, along with new iPads and MacBooks, which may help improve sales in the mid-range and entry-level segments.
Apple's first-quarter earnings announcement is scheduled for January 30, which will provide further insights into the company's financial performance and future prospects.