By Brian Swint
Shares of Apple, the most valuable company in the world, were slipping early Tuesday after analysts at Jefferies downgraded the stock.
Forecasts for soft iPhone sales and a weaker update of new artificial intelligence features prompted strategists led by Edison Lee to lower their rating to Underperform from Hold. They also reduced their price target by 13% to $200.75.
"Our concern about weak demand for iPhone has materialized," they said in a note late Monday, citing a report saying shipments were down 4% in the quarter ended in December. "AI would be unlikely to kickstart a super upgrade cycle anytime soon."
Apple shares slipped 2.1% in premarket trading to $225.26, while futures for the Nasdaq 100 were up 0.4%. Apple stock has retreated 9.9% over the past month.
It's still the most valuable company, with a market capitalization of $3.46 trillion, as of Friday's close. By comparison, chip maker Nvidia's market value is $3.37 trillion and Microsoft's is $3.19 trillion.
Optimism about the potential for AI to bolster earnings has been a driving force in the tech sector for more than a year now. Apple has benefited from the gains, and has unveiled a host of new AI features in its latest generation of smartphones such as email summaries and computer-generated emojis.
The risk is that Apple's AI benefits don't catch on. Jefferies cited a survey showing that U.S. consumers don't yet find AI features useful, which suggests they won't be willing to buy new devices to get them.
Write to Brian Swint at brian.swint@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 21, 2025 07:05 ET (12:05 GMT)
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