U.S. stocks edge higher; solid earnings season continues
Investing.com - JPMorgan lowered its price target on Apple (NASDAQ:AAPL) to $230 from $240 on Thursday while maintaining an Overweight rating, citing concerns about iPhone demand in the latter half of the year. Currently trading at $201.56, Apple appears overvalued according to InvestingPro analysis, with the stock showing high valuation multiples across revenue, EBITDA, and Price/Book metrics.
The investment bank expects a moderation in iPhone demand following recent pull-forwards from consumers who purchased devices ahead of anticipated tariff-led price increases and benefited from smartphone subsidies in China. This shift in buying patterns, combined with continuing macroeconomic uncertainty, is expected to impact sales of the upcoming iPhone 17 series. Despite these challenges, InvestingPro data shows Apple maintains a strong financial health score of 2.69 (rated as GOOD), with particularly robust profitability metrics.
JPMorgan forecasts only modest single-digit growth for Apple’s fiscal year 2026 before a stronger revenue acceleration in fiscal 2027. The bank maintains its view that the iPhone 18 series will drive a stronger cycle with the anticipated launch of a foldable smartphone and further progress on AI features that have been "long awaited and delayed relative to initial investor expectations."
The firm notes that Apple’s rapid shift of iPhone assembly from China to India for U.S. demand should limit gross margin headwinds compared to initial investor concerns. However, JPMorgan expects Apple will implement price increases to offset tariff impacts, which could further constrain volume growth for the iPhone 17 cycle.
Despite the longer-term concerns, JPMorgan indicates that near-term demand drivers remain robust due to the recent pull-forward in purchases and ongoing subsidies in China, positioning Apple to report strong results for the fiscal third quarter of 2025. The company’s revenue grew 4.91% over the last twelve months to $400.37 billion, maintaining its position as a prominent player in the Technology Hardware sector. For deeper insights into Apple’s valuation and growth prospects, including 12 additional ProTips and comprehensive financial analysis, check out the full research report on InvestingPro.
In other recent news, Apple has reported strong smartphone sales driven by subsidies in China, marking the highest sales share for April and May since the pandemic. This growth was further supported by year-over-year increases in Japan, India, and the Middle East. However, Apple is facing a lawsuit filed by shareholders in a proposed class action, alleging that the company misrepresented the timeline for integrating advanced AI features into its Siri assistant, which they claim negatively affected iPhone sales and stock price. Meanwhile, UBS has maintained its Neutral rating on Apple, noting a surge in iPhone demand attributed to fears of potential U.S. tariffs on imports from China and Southeast Asia. UBS estimates that iPhone sell-through is approximately 4 million units above last year’s figures for the same period, though it cautions that this demand is unlikely to be sustainable. Additionally, TF International Securities analyst Ming-Chi Kuo suggested that Apple’s purchase of President Trump’s "gold cards" might be an attempt to divert attention from potential iPhone tariffs. These recent developments highlight the complex landscape Apple navigates, balancing strong sales performance with legal challenges and geopolitical considerations.
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