Despite widespread optimism over Apple’s (AAPL) AI technology play, the iPhone maker is still drawing criticism from some skeptical analysts.
KeyBanc lowered its rating on Apple stock Friday from Sector Weight to Underweight.
Analyst Brandon Nispel said Apple customers’ upgrades to the iPhone 16 and iPhone sales will grow slower than expected. Nispel pointed to KeyBanc’s recent, first-ever consumer iPhone survey, which he said shows that Apple’s cheaper iPhone SE sales could take away from would-be iPhone 16 upgrades.
Wall Street analysts have disagreed over whether Apple’s iPhone 16 launch was successful in anticipation of Apple’s quarterly earnings report on Oct. 31, when the company will release official iPhone sales data. Apple is rolling out part of its suite of AI features, called Apple Intelligence, on Oct. 28.
Analysts expect Apple’s earnings per share to rise 7.5% to $1.57 and its revenue to jump 5.3% to $94.2 billion. Of the Wall Street analysts covering the stock, only three have an Underweight rating, while 65% recommend buying the stock, according to Bloomberg data. On average, analysts see shares rising to $245 over the next 12 months.
But Nispel said, “With Apple trading at a large premium to history, vs. peers, and the broader market, we think the stock is likely to underperform and needs to significantly beat expectations to move higher, which we don’t expect.”
While Citi analyst Atif Malik maintains a Buy rating on Apple stock, he noted on Friday, “We expect [the] stock to be volatile as a prolonged Apple Intelligence software release likely impacts typical iPhone sales seasonality this year.”