Apple’s Stock Takes a Hit as Analysts Predict Disappointing Earnings
iPhone Sales Slump in China
Apple’s stock plummeted 3.7% on Tuesday after two major investment banks, Jefferies and Loop Capital, downgraded their ratings on the tech giant’s stock. The downgrade was triggered by expectations of lower-than-expected earnings for the December quarter and a miss on expectations for the second quarter.
Weak iPhone Sales and Lack of Interest in AI
Jefferies analyst Edison Lee cited weak iPhone sales and a lack of interest in artificial intelligence (AI) among consumers as the primary reasons for the downgrade. Lee expects Apple to report a decline in iPhone sales in China, which fell between 15% and 20% year over year. The region’s economic slowdown and the rise of local competitors like Huawei and Xiaomi are contributing to Apple’s struggles.
Global iPhone Market Share Declines
The iPhone’s global market share fell roughly 1% year over year in Q4 to 23%, according to estimates by Canalys and IDC. This decline is despite a 3% increase in smartphone shipments, Canalys reports. Jefferies forecasts that iPhone revenue will decline 0.4% year over year for the first quarter, while total Apple sales will grow 2.8%, lower than the firm’s prior estimate of 4.6%.
AI Push Fails to Impress
Apple’s big push into AI, which was expected to drive a sales supercycle, has failed to impress investors. The company’s artificial intelligence platform, Apple Intelligence, was rolled out in batches in October, but its impact has been minimal. The slow rollout and lack of clarity on the platform’s capabilities have made it difficult for customers to understand its full potential.
New Product Launches May Offer Respite
However, Apple is set to debut new products, including a new iPhone SE, entry-level iPads, and MacBook Airs, which could help boost sales in the mid-range smartphone market and other segments. The company will report its first quarter earnings on January 30, which will provide a clearer picture of its performance.
Broader Market Context
Apple’s struggles are not unique to the company. The broader S&P 500 has climbed 20% over the last year, while Big Tech rivals Meta and Alphabet are up 36% and 30%, respectively. Microsoft, however, has only seen a 3.5% increase in its stock price over the same period.
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