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Investing.com -- Apple stock was downgraded by Phillip Securities to Reduce from Neutral as a stretched valuation and near-term headwinds outweigh the impact of the company’s latest product launches.
The target price was kept unchanged at $200 per share.
The downgrade follows a sharp rally in Apple stock, which has gained nearly 14% over the past three months, outpacing the 9.1% gain in the broader Nasdaq index.
“We maintain a cautious outlook on Apple, due to near-term headwinds from tariffs, elevated CAPEX, and no significant AI innovation to help with persistent weakness in products and the China market,” analyst Helena Wang said in a Thursday note.
At its “Awe-Dropping” launch event on September 9, Apple introduced the iPhone 17 lineup, headlined by the ultra-thin iPhone Air at just 5.6 mm, alongside the Pro and Pro Max models.
The devices feature the new A19 Pro chip, upgraded cameras, and an enhanced Ceramic Shield.
Apple also rolled out AirPods with on-device AI functions such as real-time translation, and the Apple Watch Series 11 with hypertension detection and improved durability.
Wang said that while Apple rolled out several hardware enhancements, “most remain incremental rather than disruptive.”
The highly anticipated Siri overhaul has been postponed until 2026, leaving Apple behind its peers in AI. "We continue to see limited evidence of a strong upgrade cycle, notably as Apple lags peers in AI," Wang wrote.
Moreover, while the new iPhone Air was the highlight of the event, the new model “may divert demand away from the iPhone 17 Pro and Pro Max, rather than growing Apple’s addressable market,” the analyst warned.
Pricing for the iPhone 17 range was held steady compared to the iPhone 16 launch, with the entry model starting at $799 but now offering 256GB storage instead of 128GB.
Apple’s decision to absorb tariffs and higher production costs will likely pressure margins further, Wang said, with gross margins already narrowing by 140 basis points year-on-year in the June quarter.