Jefferies analyst Edison Lee has downgraded the financial institution’s rating on Apple stock from buy to hold, with a price target of $212.92, due to underwhelming demand for the iPhone 16 and the remarkably slow rollout of Apple Intelligence — reports The Street.
Apple announced its version of on-device AI, Apple Intelligence, back in July. These new AI features are only coming to iPhone 15 Pro and newer, giving rise to expectations of a major upgrade cycle with the launch of the iPhone 16. However, iPhone 16 sales so far have been more or less on par with last year, if not lower.
It doesn’t look like AI will be able to drive iPhone sales to new heights this year, especially since the iPhone 16 launched with no real AI features to speak of. The first Apple Intelligence features won’t be rolling out until later this month, and Apple’s redesigned, AI-powered Siri isn’t even expected to debut until sometime next year.
Lee noted that short-term expectations for iPhone sales are “too high (and) a lack of material new features and limited AI capabilities mean high market expectations (5%-10% unit growth) are unlikely to be met.”
That said, the analyst is optimistic about Apple Intelligence’s long-term prospects, adding that Apple is uniquely positioned to take advantage of AI capabilities.
“We like Apple Intelligence long term, as Apple is the only hardware-software integrated player that can leverage proprietary data to offer low-cost, personalized AI services,” he said. “However, smartphone hardware needs rework before being capable of serious AI, likely by 2026/27.”
Lee went on to say that he has higher hopes for next year’s iPhone 17 series, which has been rumoured to include a slimmer “Air” model.
“We believe AI-capable smartphone tech is likely 2-3 years away due to limitations in high-speed memory and advanced packaging tech,” the analyst said. “[But] Apple’s thin model (17 Air) in 2025 could attract more upgrade demand.”
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