Apple's intraday drop exceeded 4%, its market value surpassed by NVIDIA, and several Wall Street firms downgraded or lowered their target prices

Wallstreetcn
2025.01.21 21:50
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Apple Inc. fell against the market trend in the U.S. stock market, with an intraday decline of over 4%, and its market value was surpassed by NVIDIA. Several Wall Street institutions downgraded Apple's rating and target price, with Jefferies lowering its rating to underperform and target price to $200.75; Loop Capital downgraded its rating to hold with a target price of $230; JP Morgan maintained an overweight rating but lowered its target price to $260. Analysts pointed out that Apple's iPhone sales in China fell by 18.2% year-on-year, and they hold a cautious outlook on future performance

On Tuesday, the first trading day after President Trump's inauguration, U.S. stocks rose broadly, but Apple fell against the trend, with intraday losses reaching 4.6%. Apple was downgraded by two Wall Street analysts and had its target price lowered by one analyst. Additionally, data showed that Apple's iPhone sales in China fell 18.2% year-on-year in the fourth quarter.

Here are the latest negative statements from Wall Street institutions regarding Apple:

  • Jefferies downgraded Apple's rating to underperform, becoming one of the rare Wall Street institutions to give Apple a rating equivalent to sell. Only 8.5% of analysts have a bearish rating, while about 63% have a rating equivalent to buy. Jefferies also lowered Apple's target price from $211.84 to $200.75.
  • Loop Capital downgraded Apple's rating to hold, previously rated as buy, with a target price of $230.
  • JP Morgan analysts maintained their overweight rating on Apple but lowered the target price from $265 to $260, citing a cautious outlook for the company.

Edison Lee, leading the Jefferies analysts, pointed out:

In the world's largest smartphone market, iPhone sales are underperforming and are not driven by the hype of artificial intelligence. The company's revenue in the first quarter of 2025 is unlikely to meet expectations and may not achieve the anticipated 5% growth in operating revenue for the first quarter of 2025. Apple's guidance for the March quarter's performance may also be disappointing.

Lee also lowered expectations for iPhone 17/18 due to the slowing pace of artificial intelligence adoption and commercialization, adding that Apple's AI prospects seem bleak.

Analysts also noted that sales of iPhones and overall consumer electronics are weaker than expected.

Concerns raised by JP Morgan analysts include:

A strong dollar, while demand for Apple products is limited.

Given the current artificial intelligence capabilities, sales of Apple products are flat.

Weak demand in China. They expect Apple to continue losing market share in China as the company has passed the peak of its product cycle, and Apple's high-end smartphone models cannot benefit from local government subsidies for mid-to-low-end phones.

According to the latest data from Counterpoint, smartphone sales in China fell 3.2% year-on-year in the fourth quarter of 2024, making it the only quarter in 2024 to see a year-on-year decline. In the fourth quarter, Huawei ranked first in market share, followed by Xiaomi and Apple. Faced with fierce competition from Huawei and other Chinese smartphone brands expanding in the high-end market, Apple ranked third in the fourth quarter of 2024, with a market share of 17.1%. Apple's iPhone sales in China fell 18.2% year-on-year in the fourth quarter. According to data released by market research firm Canalys, the shipment volume of the Indian smartphone market is expected to decline by 4% in the fourth quarter of 2024, reaching 37.2 million units. Among them, vivo maintains its lead with a shipment volume of 7.5 million units and a 20% market share, followed closely by Xiaomi and Samsung with 5.7 million and 5.4 million units, respectively. OPPO (excluding OnePlus) and Apple enter the top five with 4.2 million and 4 million units, respectively, with Apple making its first appearance in the top five driven by aggressive promotions and holiday demand.

On January 20, the national subsidy for mobile phones officially launched. Currently, most of Apple's main models can enjoy the national subsidy, including the iPhone 15, iPhone 16, etc. A consumer ordered a 256GB iPhone 16 through the national subsidy, priced at 5,499 yuan. Compared to the U.S. market, the iPhone 16 after the national subsidy is the lowest price globally, making it Apple's most "attractive" model. Additionally, some netizens found that the iPhone 13 128GB version can be obtained for only 2,999 yuan after the national subsidy, reaching a historical low price. According to estimates, driven by the national subsidy policy, domestic smartphone sales are expected to reach 300 million units this year.

Analysis indicates that Apple's downgrade in ratings further highlights growing investor concerns over weak iPhone sales, with external observers believing that artificial intelligence (AI) has failed to serve as the expected growth catalyst.

Earlier this month, Ming-Chi Kuo, an analyst who understands Apple best from Tianfeng International, stated that Apple will face more severe challenges this year, including nearly stagnant iPhone growth, AI services still not contributing, and continued shrinkage of its business in China. Kuo believes the market is overly optimistic, and there is a risk of stock price decline. When Kuo expressed his pessimism about Apple, the stock price was around $236.

As of Tuesday's close, Apple fell 3.2%, closing at $222.64. Since 2025, Apple's stock price has cumulatively dropped by 11%. On Tuesday, Apple's market value was surpassed by NVIDIA, losing its position as the world's most valuable company.

There was also no good news from "Capitol Hill's stock god." Pelosi recently made significant trades in U.S. tech giant stocks, buying call options for Google and Amazon, while selling Apple and NVIDIA. On the last trading day of 2024, she sold 31,600 shares of Apple common stock, with a transaction amount between $5 million and $25 million, marking her largest transaction in the past month.

Additionally, Wall Street Insights learned from the supply chain that Apple's foldable phone battery will use a full steel shell material, consisting of two pieces. Apple's foldable smartphone is expected to launch in the third quarter of 2026. Currently, supply chains in mainland China and Taiwan have begun preliminary preparations Apple Inc. will announce its financial report after the U.S. stock market closes next Thursday, January 30.

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