Apple's (AAPL, Financial) shares fell from $229.78 to $225.78 due to weaker-than-expected pre-order sales for its AI-equipped iPhone 16 series. Despite a 36% stock increase since April, optimism that AI features would boost phone upgrades and revenue is fading as early demand appears underwhelming. Reports indicate that although the initial sales were strong due to limited stock, global pre-orders declined by about 13% compared to the iPhone 15.
Investment bank Jefferies downgraded Apple's stock from "buy" to "hold," citing unrealistic expectations for the new AI features. Analyst Edison Lee predicts a 6% drop, estimating the stock will reach $213. He points out that current smartphone hardware lacks the capability for advanced AI functions, and it may take two to three years to develop suitable hardware.
At its Worldwide Developers Conference, Apple launched an AI tool known as "Apple Artificial Intelligence," which helped boost its stock to record highs. However, the anticipated AI coverage is limited, impacting sales growth expectations of 5%-10%.
Korean and financial media report that initial iPhone 16 sales are underwhelming. Citibank revised down its performance estimates for Apple's iPhone segment for the September and December quarters. A survey by JPMorgan finds that despite faster connectivity, the new AI features aren't driving purchases.
Barclays also expressed a pessimistic outlook, indicating Apple might have reduced orders for key iPhone components by about three million units for the current quarter. This cut could significantly impact next year's profits, given that iPhones still account for nearly 60% of Apple's revenue.
The phased rollout of Apple's AI platform is identified as a major hurdle for early sales. The U.S. launch is set for mid-October, with other languages to follow next year, potentially delaying initial demand.
