Apple stock drops 11% on slumping iPhone sales and AI disappointment

Key points.Apple shares drop 11% in January, marking a steep one-month decline.Analysts downgrade stock as iPhone demand softens, especially in China.AI fails to spark growth, leaving investors cautious about future prospects..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Ryan Vlastelica___STEADY_PAYWALL___.Apple Inc. received a pair of analyst downgrades, in the latest sign that soft iPhone sales are becoming an increasing concern for investors, as artificial intelligence fails to act as a hoped-for growth catalyst..Shares fell 3.2% on Tuesday, closing at its lowest since November amid a rocky start to the year. The stock is down 11% in January, putting it on track for its biggest one-month decline since December 2022. It has dropped 14% from a December peak..The day erased more than $110 billion from the company's market capitalization, enough for it to close under Nvidia Corp. in size for the first time since November. Apple now has a valuation of $3.35 trillion, compared with $3.45 trillion for the AI-focused chipmaker. .The company was downgraded to hold at Loop Capital and cut to underperform at Jefferies, which became a rare firm with the equivalent of a sell rating on the stock. Just 8.5% of the analysts tracked by Bloomberg have a bearish rating, while about 63% have the equivalent of a buy..Jefferies analyst Edison Lee writes that recent weakness in iPhone sales has been worse than expected, with the China market a particular concern. Independent research indicates that iPhone sales sank 18.2% in China during the December quarter, while global unit sales fell about 5% in the final quarter of last year amid higher China competition..Read more: 🔒 Apple's next ultra smartwatch to add satellite texting, blood-pressure alerts by 2025.Citing a third-party survey, Lee added that "US consumers do not yet find smartphone AI useful," meaning that it is "unlikely to kickstart a super upgrade cycle anytime soon." Given these trends, he wrote, Apple's March quarter guidance could disappoint. .Separately, Loop expects a "material iPhone demand reduction" beginning in the March quarter "but materially amplifying" in the subsequent two quarters. While the drivers of the firm's former buy rating could still materialize, analyst Ananda Baruah wrote, "it certainly won't be for the next nine months given we're on the front end of 2.5 Q's of materially softening iPhone demand.".Apple is scheduled to report its first-quarter results next week. .With the downgrades, Apple's recommendation consensus — a proxy for the ratio of buy, hold, and sell ratings — stands at 4.02 out of five, its lowest since May, and down from an August peak of about 4.3. Just over 60% of the analysts tracked by Bloomberg recommend buying the stock, a rate well below other megacap tech stocks, where the percentage of buy ratings tops 80% or even 90%..MoffettNathanson downgraded the stock earlier this month, citing concerns in China and the stock's valuation. .Also on Monday, Morgan Stanley named Seagate Technology its top pick among IT hardware names, replacing Apple..Read also:.🔒 FT: Warren Buffett's Apple share sales and cash pile spark intrigue over motivesApple unveils the upgraded, but not-quite-AI-ready, iPhone 16Experts urge calm for Apple investors after Buffett trims stake in tech company.© 2025 Bloomberg L.P.

Apple stock drops 11% on slumping iPhone sales and AI disappointment

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