Apple shares have rallied around 36% from April amid optimism that AI will drive consumers to upgrade
“The high expectations for iPhone 16/17 are premature,” as “a lack of material new features and limited AI coverage mean high market expectations (five per cent-10 per cent unit growth) are unlikely to be met,” wrote Jefferies analyst Edison Lee, who assumed coverage of the stock with a hold rating. The firm previously had a buy rating.
Shares of Apple have rallied around 36 per cent from their April low, with much of the gain reflecting optimism that the AI features will drive consumers to upgrade their phones, re-accelerating revenue growth. But the early signs indicate demand have been mixed.
Lee said he recognizes the long-term potential in AI, seeing Apple as “the only hardware-software integrated player that can leverage proprietary data to offer low-cost, personalized AI services.” However, he said the current valuation is “rich” and that AI won’t be a driver in the near-term.
“Smartphone hardware needs rework before being capable of serious AI,” and that has a “likely timeline of 2026/27.”