Apple lost the top share crown as analysts cut back on the threat of the iPhone
(Bloomberg) — Apple Inc. suffered a pair of analyst downgrades, the latest sign that softer iPhone sales are becoming a concern for investors as artificial intelligence fails to live up to the hoped-for growth driver.
Most read from Bloomberg
Shares fell 3.2% on Tuesday, closing at their lowest since November amid a rocky start to the year. In the year The largest one-month decline since December 2022 followed an 11 percent drop in January. It is down 14 percent from its December high.
The day wiped more than $110 billion from the company’s market capitalization, enough to close below Nvidia Corp for the first time since November. Apple is now worth $3.35 trillion, compared to $3.45 trillion for the AI-focused chipmaker.
The company was downgraded to holdings by Loop Capital and underperformed by Jefferies, making it the rare firm with the same sell rating on the stock. About 8.5% of analysts tracked by Bloomberg have a bear rating, while 63% have a buy rating.
Jefferies analyst Edison Lee recently noted that the weakness in iPhone sales is worse than expected, with the Chinese market particularly concerned. According to independent research, iPhone sales in China fell 18.2% in December, while global unit sales fell 5% in the last quarter of last year amid intense competition in China.
Citing third-party research, Lee added that “US consumers don’t find smartphone AI useful,” adding that “it’s unlikely to start a much more advanced upgrade cycle anytime soon.” Given these trends, Apple’s March quarter guidance may disappoint, he wrote.
Separately, Loop expects a “material decline in iPhone demand” beginning in the March quarter, “but materially accelerating” over the next two quarters. While the company’s previous buy-level drivers may still be in place, analyst Ananda Baruh said: “It’s definitely not for the next nine months as we are at the front end of the 2.5Q range.”
Apple is scheduled to report its first quarter results next week.
With the decline, Apple’s consensus estimate — a proxy for the buy, hold and sell ratio — stands at 4.02 out of five, the lowest since May, and down from a peak of about 4.3 in August. More than 60% of analysts tracked by Bloomberg recommend buying the stock, which is priced below other megacap tech stocks and has a buy rating percentage of more than 80% or 90%.