Apple's shares experienced a decline of over 1% on Monday, October 7, following comments from a Jefferies analyst suggesting that market expectations for the company's latest iPhone, which incorporates AI features, were overly optimistic.
The analyst, Edison Lee, indicated skepticism regarding the anticipated growth figures of 5%-10% for iPhone sales, noting that these expectations might not materialize due to a lack of substantial new features and limited AI integration. This assessment led to a downgrade of Apple's stock rating from 'buy' to 'hold'.
Despite a 36% rebound in Apple’s stock since a low point in April, fueled largely by positive sentiment around potential AI-driven consumer upgrades, early indicators suggest demand is not meeting these heightened expectations.
Lee acknowledged Apple's long-term potential in the AI sector, emphasizing its unique position as a company capable of leveraging proprietary data to offer personalized AI services. However, he also pointed out that Apple's current valuation appears elevated, and AI is unlikely to become a major growth driver in the short term.
The analyst further commented on the necessity for smartphone hardware advancements to fully support robust AI capabilities, projecting that such developments might not reach fruition until 2026 or 2027.
In comparison to other major tech companies, analysts on Wall Street exhibit more caution towards Apple. Only 65% endorse buying Apple shares, whereas companies like Microsoft, NVIDIA, and Amazon see buy recommendations at or above 90%.