After Jefferies and Rosenblatt Securities, Needham downgrades Apple; says: For this stock to work, it must have ...
Apple Inc. shares declined 0.6% in premarket trading on Wednesday, signaling a continuation of its 2025 struggles, with the stock down 19% year-to-date, the weakest performance among the Magnificent Seven, according to Bloomberg. Wall Street's concerns center on Apple's growth prospects and its lagging position in the artificial intelligence (AI) landscape, compounded by competitive pressures and political risks.
Needham & Company downgraded Apple to hold from buy, joining a growing list of firms tempering expectations. Analyst Laura Martin highlighted multiple risks, including intense competition, sluggish growth, and a valuation that 'looks expensive on several metrics.' She noted, 'For this stock to work, it must have the catalyst of an
iPhone replacement cycle
, which we do not foresee in the next 12 months,' per Bloomberg. Martin also pointed to Apple's slow progress in generative AI, stating that innovations in this space 'open the door for new hardware form factors that threaten iOS devices.'
What is hurting Apple stock
The selloff partly reflects political uncertainty, as Apple's global manufacturing footprint makes it vulnerable to tariffs, with the Trump administration repeatedly targeting the company. Additionally, Apple's AI struggles have intensified scrutiny. The recent acquisition of io, a startup co-founded by former Apple design icon Jony Ive, by OpenAI underscores the competitive threat in AI-driven innovation, potentially challenging Apple's hardware dominance.
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Needham's downgrade follows similar moves by Jefferies and Rosenblatt Securities in May, with Oppenheimer, MoffettNathanson, Loop Capital, Aletheia Capital, and DBS Bank also cutting ratings earlier in 2025, Bloomberg reports. Only 58% of analysts tracked by Bloomberg now recommend buying Apple, a stark contrast to peers like Microsoft, Amazon, Nvidia, and Meta, which boast buy ratios near or above 90%. Apple's challenges in AI, coupled with macroeconomic headwinds and a lack of near-term catalysts, continue to weigh on investor sentiment.
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