Apple Stock: Wall Street Analysts Sound Alarm
Ahead of Apple’s upcoming earnings report, several prominent Wall Street analysts have downgraded their ratings or price targets for the tech giant’s stock. Jefferies, Loop Capital, and JPMorgan have all expressed concerns about the company’s performance and the outlook for its AI features.
Jefferies Downgrades Apple to ‘Underperform’
Jefferies analyst Edison Lee downgraded Apple stock to ‘underperform’ (or ‘sell’) from ‘hold.’ Lee cited indications of weak iPhone sales, particularly in China, as a key reason for his negative outlook. He believes Apple will miss its estimates for the first fiscal quarter and its guidance.
According to Lee, sales estimates for current and upcoming iPhones are too high due to the slower-than-expected rollout and adoption of AI features branded as Apple Intelligence. He argues that expectations for Apple Intelligence to drive a significant upgrade cycle are overly optimistic and that the rollout is likely to be gradual.
Lee further noted that consumers are not yet enthusiastic about AI on smartphones and that hardware upgrades necessary for enabling smarter AI are expensive and could hinder the widespread adoption of AI features.
Loop Capital Downgrades Apple to ‘Hold’
Loop Capital analyst Ananda Baruah downgraded Apple stock due to signs of softening iPhone demand. In a client note, Baruah stated that generative AI features have failed to boost sales of the iPhone 16.
Baruah described the rollout of Apple Intelligence as ‘dismal,’ citing widespread reports of issues with the new Siri and disappointing user experiences. He also noted that AI features designed to assist with writing have been poorly received.
JPMorgan Lowers Price Target
While maintaining an ‘overweight’ (or ‘buy’) rating on Apple stock, JPMorgan analyst Samik Chatterjee lowered his price target from 265 to 260. Chatterjee expressed concerns about Apple’s smartphone market share loss in China, limited traction for AI features, and foreign exchange headwinds.
Chatterjee emphasized that the market is more concerned about Apple’s outlook than its upcoming earnings report. He cited several factors that could impact the company’s performance, including potential tariffs, the ongoing COVID-19 pandemic, and geopolitical tensions.
Apple’s Market Performance
Despite the recent downgrades from analysts, Apple’s stock has generally performed well in recent months. However, it has experienced some volatility leading up to the earnings report. On the stock market today, Apple’s stock fell 3.2% to close at 222.64.
Conclusion
The downgrades from Wall Street analysts reflect concerns about Apple’s iPhone sales and the adoption of its AI features. While Apple remains a dominant player in the tech industry, investors are closely monitoring the company’s performance and outlook in the face of growing competition and economic uncertainty.
Additional Insights:
It’s important to note that analyst ratings and price targets are based on their own research and opinions. Investors should always conduct their own due diligence and consider their risk tolerance before making any investment decisions.
Apple’s earnings report is scheduled for Tuesday, January 31, after the market closes. Investors will be closely watching the company’s financial results and guidance for the upcoming quarters to gauge its performance and future prospects.
