Jefferies downgrades Apple's rating, stating that the market is overly optimistic about Apple's AI phone, causing Apple's stock price to drop more than 1.2% at one point
Jefferies analyst believes that the market's expectations for Apple's AI phone are too high, downgrading Apple's rating from buy to hold, causing Apple's stock price to fall more than 1.2% in early trading on Monday. Previously, the market believed that AI features would drive consumer upgrades to phones and accelerate Apple's revenue growth. Fueled by this optimism, Apple's stock price has risen by about 36% from its low point in April
On Monday, October 7th, Eastern Time, after Jefferies analysts believed that investors' expectations for Apple's latest iPhone were too optimistic, Apple's stock price fell by more than 1.2% in early trading.
This new iPhone is the first model equipped with AI functions. However, analyst Edison Lee stated that the high expectations for iPhone 16 and iPhone 17 are unrealistic. Due to the lack of substantial innovative features and limited AI applications, the market's expectations for sales growth (5%-10%) may not be realized. Therefore, a hold rating was given, whereas it was previously a buy rating.
Despite Apple's stock price rising by 36% since its low point in April, many optimistically believed that AI functions would drive users to upgrade their phones, leading to revenue growth for Apple. However, early signs indicate that market demand is not as strong as expected.
Lee believes that while Apple has potential in the AI field in the long term, especially as the only player capable of providing low-cost, personalized AI services through its proprietary data as a software and hardware integrated player, he also pointed out that Apple's current valuation is "high" and AI will not be a major growth driver in the short term.
He also mentioned that hardware improvements in smartphones are needed to truly support powerful AI functions, which may not be achieved until 2026 or 2027.
Compared to other large tech companies, Wall Street is more cautious about Apple. Only 65% of analysts recommend buying Apple's stock, while this percentage is close to or exceeds 90% for Microsoft, NVIDIA, and Amazon