Key Takeaways
- Needham analysts downgraded Apple from “buy” to “hold” on Wednesday and withdrew their price target for the stock.
- Analyst Laura Martin doesn’t anticipate a strong iPhone upgrade cycle, which she believes Apple needs for its share price to rise.
- Tech analysis firm Counterpoint Research also on Wednesday trimmed its estimate for global smartphone shipment growth this year.
Apple (AAPL), one of the famed Magnificent Seven stocks, is no longer a “buy,” according to analysts at Needham.
The iPhone maker’s valuation is too pricey compared with its Big Tech peers and doesn’t appear primed for a strong device upgrade cycle, Needham wrote to clients Wednesday. Analyst Laura Martin downgraded Apple to “hold” from “buy” and withdrew its price target of $225. “We move to the sidelines for AAPL owing to its expensive relative valuation, increasing fundamental growth headwinds, and rising competitive threats,” Martin said in the research report.
Apple’s share-price growth is dependent on a successful iPhone upgrade cycle, which Needham doesn’t expect within the next year, even with the iPhone 17 expected to drop this fall. The downgrade comes as Apple has turned in one of the worst performances among the Magnificent Seven stocks so far in 2025. The stock is currently neck-and-neck with Tesla (TSLA) for that title, with both down about 18% this year.
Smartphone Shipment Growth Expected To Slow
Smartphone demand in general is under pressure, technology analysis firm Counterpoint Research said Wednesday. The group revised downward its global smartphone shipment growth forecast to 1.9% in 2025—below its prior estimate of 4.2%—citing the impact of U.S. tariffs. North America shipments are expected to decline 3% this year, easily the worst projection for any region.
“All eyes are on Apple and Samsung because of their exposure to the US market,” Counterpoint Associate Director Liz Lee said. “Although tariffs have played a role in our forecast revisions, we are also factoring in weakened demand.”
President Donald Trump warned Apple last month that the administration will impose a tariff of at least 25% on iPhones sold in the U.S. that are made in other countries, including in India, where the company has shifted production to avoid import taxes on China.
Apple Is Not a Cloud Company, Needham Says
One issue for Apple, relative to its peers, is that its strides in artificial intelligence can only be used to improve its own ecosystem, Needham said. Meanwhile, Google parent Alphabet (GOOGL) can drive revenue by charging other companies a fee to use its Gemini models, and Amazon (AMZN) makes money from firms using its Amazon Web Services.
“AAPL does not own a Cloud business so this becomes a cost center, rather than a new [revenue] and margin upside driver,” Needham said.
Apple will get a chance to make its case for the future at its Worldwide Developers Conference next week. The company is expected to introduce an iOS update as well as a potential new AI partnership with Google, according to Goldman Sachs analysts.
Of the 12 analysts covering Apple tracked by Visible Alpha besides Needham, eight have “buy” or equivalent ratings, with two “hold,” and two “sell” ratings. Their targets range from $170 to $270.
Apple shares were little changed in recent trading, just above $203 a share. (Read Investopedia‘s full coverage of today’s trading here.)
