Apple (AAPL) Shares fell again on Friday, extending their year-to-date decline to around 3%, following a key analyst downgrade linked in part to the tech giant's weak iPhone growth forecasts.
Apple stock has notably underperformed its Magnificent 7 peers this year, largely as a result of the lack of a defined ai strategy at the world's second-largest tech company.
Fading demand metrics in China, where Apple has been selling the new iPhone 15 at a deep discount, as well as its exit from a decade-long project to build a self-driving car, have added to the pessimistic tone surrounding the cluster.
Chief Executive Tim Cook attempted to address some of those issues earlier this week at the group's annual meeting in Cupertino, California, promising investors that he would “break new ground” in artificial intelligence technologies this year. Cook also teased an “important announcement” about ai when he spoke to investors following the group's fiscal first-quarter earnings report last month.
Cook's comments followed the failure of a proposal, put forward by AFL-CIO pension fund managers at the annual meeting, to reveal Apple's artificial intelligence plans and the ethical guidelines it will establish as it deploys the technology. .
However, analysts at Goldman Sachs removed the stock from their benchmark 'Conviction Buy List – Directors Cut' and downgraded its rating to 'neutral' from 'buy', despite having faith in the base's earnings power. installed of iPhones from the technology giant. iPads and Macs.
Goldman: Apple faces headwinds
Goldman pointed to headwinds related to product revenue, including “reduced demand for iPhone units due to a lengthening replacement cycle and reduced consumer demand for the PC and tablet category.” Both issues, the bank noted, “would more than offset… growth in Apple's installed base, secular growth in services and new product innovation.”
Apple faces a series of headwinds in China, which normally accounts for nearly a fifth of its total revenue, as officials in Beijing move to ban the device from some government officials and employees of state-backed companies. and intense competition from its Asia-based rivals eats away at its market share.
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The group is also seeing a decline in overall demand for its newly launched iPhone 15, which disappointed Apple enthusiasts last fall and failed to capture the consumer zeitgeist of previous upgrades.
Global iPhone sales rose 6%, surprising forecasters with a total of $69.7 billion that helped overall group revenue rise just over 2% to $119.58 billion.
However, China's December quarter numbers were disappointing, with revenue falling 13% to $20.82 billion, a figure that missed Wall Street forecasts by around $3 billion.
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In terms of earnings, Apple's fiscal first-quarter results rose 3.8% to $2.18 per share, with net income of $33.92 billion, with both totals exceeding analyst forecasts.
Cook told investors that generative ai technologies remain a “huge opportunity” for Apple, and spoke of “a lot of work being done internally” on the earnings conference call.
“Our 'MO,' so to speak, has always been to work and then talk about work and not get ahead of ourselves. So we're going to maintain that as well,” Cook said. “But we have some things we're really excited about that we'll talk about later this year.”
Apple shares were down 0.36% in premarket trading, indicating an opening price of $180.10 each, a move that would extend their six-month decline to around 5%.
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