Apple (AAPL, Financials) was downgraded by Needham to “hold” from “buy” on Wednesday, with the firm withdrawing its $225 price target. Analyst Laura Martin cited weak expectations for the iPhone upgrade cycle, an expensive valuation versus peers, and rising competitive risks.
Martin said the iPhone maker needs a strong upgrade cycle to justify further stock gains, but demand looks soft heading into the iPhone 17 launch this fall. Shares are down about 18% year-to-date, making Apple one of the worst-performing “Magnificent Seven” stocks alongside Tesla (TSLA, Financials).
Separately, Counterpoint Research slashed its 2025 global smartphone shipment growth forecast to 1.9%, down from 4.2%, due to tariff pressures and soft demand. North American shipments are projected to decline 3%, the worst of any region. Apple and Samsung are seen as especially vulnerable.
Apple is also lagging its peers in monetizing artificial intelligence, Needham said. While Alphabet (GOOGL, Financials) and Amazon (AMZN, Financials) generate AI revenue via cloud platforms, Apple lacks a similar business, making AI investments a cost center rather than a growth driver.
The downgrade comes ahead of Apple's Worldwide Developers Conference next week, where the company is expected to unveil new iOS features and possibly announce a generative AI partnership with Google. Apple shares were little changed near $203 on Wednesday.
