Apple shares faced pressure this week after analysts at Jefferies and Loop Capital downgraded the stock.
Jefferies reduced its rating to “Underperform” and lowered its price target by 13% to $200.75.
Loop Capital downgraded from “Buy” to “Hold,” revising its target to $230 from $275. Both moves point to concerns over slowing iPhone sales and lackluster consumer interest in AI initiatives.
Investor sentiment has taken a hit, with Apple’s December quarter earnings expected to fall short of projections.
Shares dropped as much as 3.7% on Tuesday. Despite a 16% increase in Apple’s stock over the past year, rivals like Meta and Alphabet saw gains of 36% and 30%, respectively. Microsoft lagged behind with a 3.5% rise, while the S&P 500 climbed 20%.
China’s Cooling Demand and Global Impact
In China, Apple is grappling with a significant slowdown. iPhone sales in the region fell between 15% and 20% year over year, as domestic competitors Huawei and Xiaomi gained ground.
Weak economic conditions and cautious consumer spending exacerbated the decline. Globally, Apple’s Q4 market share dropped 1% to 23%, even as smartphone shipments grew 3%, according to Canalys.
Jefferies forecasts iPhone revenue will decline 0.4% year over year in the first quarter, while total sales are expected to grow 2.8%, down from earlier estimates of 4.6%.
Business leaders are particularly focused on Apple’s challenges in maintaining dominance as competition intensifies in key markets like China, which accounted for $66.9 billion of Apple’s $391 billion revenue in 2024.
The company’s Services division added $96.1 billion, but iPhone sales remain its lifeblood.
AI Rollout Falls Short
Apple’s push into AI with its “Apple Intelligence” platform has not met expectations. Rolled out in stages starting October, the platform’s staggered debut has made it harder for consumers to embrace its full potential.
This has tempered hopes of a transformative sales cycle driven by AI-driven devices, adding to concerns about broader market adoption of AI-focused hardware.
Apple aims to recover momentum with the release of a new iPhone SE and updated entry-level iPads and MacBook Airs, targeting a broader audience. These launches could stabilize sales across hardware segments.
However, as Apple reports its first-quarter earnings on January 30, all eyes will be on its ability to navigate headwinds in China and rekindle enthusiasm for its flagship products.
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