Analyst unveils Apple stock rating as iPhone 16 demand issue lingers
The first of Apple's new AI features for the iPhone 16 could be available later this month.
Apple shares moved lower in early Monday trading after a top Wall Boulevard analyst issued a rare downgrade for the tech giant, citing concerns that its new push into artificial intelligence will likely be slowed by muted demand for handsets.
Apple (AAPL) , which in early June unveiled its version of AI, dubbed Apple Intelligence, is attempting to leverage its dominance within the smartphone market to drive consumer demand for the logo new technology. The tech giant launched its most modern version of its signature iPhone in September and promised to roll out AI-powered features over the arrival months.
Early reports, nonetheless, show overall demand for the iPhone sixteen remains muted when put next with previous launches, while rival smartphones from both Samsung and China-based rivals are taking larger chunks of sales from key markets in Asia.
Some analysts, nonetheless, see the logo new iPhone sixteen, and the likely-improved iPhone 17, driving an upgrade supercycle with a view to lift handset sales and accelerate the takeup of Apple Intelligence technologies.
Apple is reportedly set to unveil its first Apple Intelligence features later this month, with the launch of its new iOS 18.1 operating system on Oct. 28. Which may possibly provide first get entry to to iPhone sixteen, iPhone 15 and iPhone 15 Pro users who update their software. Justin Sullivan/Getty Images
Jefferies analyst Edison Lee, who assumed coverage of Apple this week, is really not one in every of them, He says near-term expectations for iPhone sales are "too high (and) an absence of material new features and limited AI capabilities mean high market expectations (5%-10% unit growth) are unlikely to be met."
Apple AI rollouts will take time
Lee lowered Jefferies' rating on Apple to hold from buy and put a $212.Ninety two price target in place, citing the stock's rich valuation of 33 times earnings and the long time period for AI rollouts.
"We like Apple Intelligence long-term, as Apple is the appropriate hardware-software integrated player which is able to leverage proprietary data to give low-cost, personalized AI services and products," Lee said. "However, smartphone hardware needs rework earlier than being ready to serious AI, likely by 2026/27."
Related: Apple has an iPhone sixteen problem
Still, Lee argues that Apple has a longer-term advantage pertaining to to tech and value development over its Android-based competitors, in particular given its partnership with chipmaker Taiwan Semiconductor (TSM) , and sees next year's iPhone 17 as in spite of everything driving stronger sales growth.
More AI Stocks:
- Apple stock slides as big iPhone sixteen bet sputters
- Analyst revisits Meta stock price target as Facebook parent ramps AI spend
- Analyst reviews BlackRock stock rating after AI partnership with Microsoft
"We trust AI-capable smartphone tech is likely 2-three years away attributable to limitations in high-speed memory and improved packaging tech," he said. "[But] Apple's thin model (17 Air) in 2025 may maybe attract more upgrade demand."
Related: Analysts question iPhone sixteen demand p.c. as Apple stock extends slide
Apple is scheduled to report fiscal-fourth-quarter results on Oct. 31, with early estimates suggesting earnings of around $1.60 a share on revenue of $Ninety four.four billion.
Apple shares were last marked 0.9% lower in premarket trading to point a gap bell price of $224.Seventy six, a move which may trim their one-month gain to around 1.5%.
Related: The 10 best investing books, in step with our stock market pros
What's Your Reaction?
