Apple Faces Downgrades Amid Tariff Turmoil as Microsoft Overtakes in Market Cap

Apple recently faced a dual downgrade from Wall Street analysts, with notable concerns surrounding tariffs and the company's growth prospects following the release of its latest financial report. Jefferies analyst Edison Lee demoted Apple's rating to “underperform,” citing the expanding impact of tariffs that could lead to increased downside risks in earnings over time.

Apple's financial results revealed weaker-than-expected sales in China and forecasted an additional $9 billion in costs due to tariffs. The company projects this quarter's revenue growth to be in the "low to mid-single-digit" range, a cautious outlook in light of current global trade tensions.

Ask Aime: What's next for Apple after two Wall Street downgrades?

Rosenblatt Securities analyst Barton Crockett also lowered Apple’s rating to “neutral,” emphasizing the need for a breakthrough product to rejuvenate growth amidst a volatile regulatory and tariff environment. He highlighted Apple's robust supply chain capabilities and stronger-than-anticipated demand for iPhones but pointed out that significant growth driven by artificial intelligence advancements is crucial for improving Apple’s stock performance.

Despite these concerns, some analysts like Citigroup's Atif Malik remain optimistic about Apple's fundamentals, noting the company's commendable performance and guidance in a challenging tariff environment, albeit with a conservative outlook.

However, these downgrades reflect a generally cautious sentiment towards apple compared to other tech giants. Currently, less than 60% of analysts tracked recommend buying Apple shares, a relatively low proportion among high-cap companies. The downgrades bring the total number of negative ratings on Apple to four.

In contrast, Microsoft's recent successful earnings have propelled its stock upward, ultimately allowing its market capitalization to surpass Apple’s at the opening of trading Friday.