Oppenheimer downgrades Apple on weakening iPhone sales and worries around AI innovation

Published Wed, Jan 29 20258:32 AM ESTUpdated Wed, Jan 29 202511:40 AM EST

Apple is struggling to keep up with iPhone sales and a competitive artificial intelligence landscape, leading Oppenheimer to move to the sidelines on the stock. The firm downgraded Apple to perform from outperform and removed its $250 price target on the stock, citing a weaker outlook for iPhone sales in the next 12 to 18 months, lack of AI innovation and challenges in the Chinese market. "We see a twofold challenge ahead for iPhone growth: 1) stronger competition in greater China and 2) lack of compelling Apple Intelligence and generative AI apps to accelerate near-term device replacement," analyst Martin Yang said in a note to clients. "With slower-than-expected iPhone sales since last September and elevated valuation, we believe it will be challenging for AAPL to outperform." Apple shares have shed nearly 5% this year. Over the past year, the stock is up roughly 24.9%. AAPL 1Y mountain Apple stock performance. Yang expects a slower-than-expected iPhone replacement cycle heading into fiscal 2026, during which he sees just 2% shipment growth. According to the analyst, that lackluster figure is due to the gradual rollout of Apple Intelligence, the company's lack of generative AI apps for consumers and the rapid improvement in capabilities from other AI models. "We see little upside to Apple's valuation and believe it is hard to justify its premium multiple with slower iPhone growth and Apple's uncertain role in the early stages of gen AI adoption among consumers," he said. Shipments for Apple's iPhone in China are another particularly concerning point for Oppenheimer, which cited data from tech market analyst firm Canalys showing that iPhone shipments in the country fell 25% in the fourth quarter and 17% in 2024. Android original equipment manufacturers, or OEMs, could cap iPhone's market share in mainland China, as it is "where Apple has the least leverage to showcase its software/ service differentiation and synergy with other Apple hardware," Yang said. Most analysts remain bullish on the stock. Of the 48 who cover the tech giant, 32 have a buy or strong buy rating on it, LSEG data shows.