Aniket PujariApple is having a particularly rough week, as its latest announcement has killed hopes that artificial intelligence would soon drive a new iPhone upgrade cycle. Wall Street is getting restless waiting for Apple to prove its artificial intelligence prowess, having been unimpressed for several months with the iPhone maker’s inability to develop an AI-powered product that could translate into greater sales. The latest disappointment came last Friday: Apple announced that it is delaying AI improvements to its Siri voice assistant to 2026. Those new capabilities were previously expected to debut this spring. Investors punished the stock this week, sending it lower by nearly 12% and making it the worst performer among the Magnificent Seven in the period. Apple shares are up more than 23% over the past 12 months, however. “With 2025 iPhone growth expectations now 1% (down from 7% just two quarters ago) and key catalysts around Apple Intelligence Siri upgrades now delayed, we think bulls will lose confidence in any upgrade cycle hope,” KeyBanc Capital Markets analyst Brandon Nispel wrote in a note to clients. He reiterated his underweight rating and $200 price target on the stock, suggesting 7.8% potential downside ahead, and said that Apple’s expensive valuation is unwarranted given its “inferior growth.” KeyBanc found that U.S. customer spending on Apple has gone “from nicely positive to a sharp decline” over the past year. The investment firm expects to see below historical average growth in the second fiscal quarter of this year compared to the company’s history. Spending data from over 1.8 million KeyBank credit and debit card customers in the U.S., filtered by Apple transactions higher than $399, showed that spending fell 9% month over month in February, Nispel said. That’s below the three-year average of a 3% decline. The firm’s data reflected that year-over-year spending also fell, showing Apple is tracking below historical seasonality. “Apple is an impressive business with what we believe are unrealistic expectations to reaccelerate growth across all product categories and geographies. Expectations around the AI smartphone seem overdone,” KeyBanc’s Nispel said. He added that “with Apple trading at a large premium to history, vs. peers and the broader market, we think the stock is likely to underperform and needs to significantly beat expectations to move higher, which we don’t expect.” This slowdown could be a pause before new product introductions, such as the iPhone 16e launched in late February or a broader pullback from consumers, Nispel said. Still, he remains concerned that the iPhone 16 and Apple Intelligence could fail to drive upgrade rates and that the iPhone SE could kill iPhone 16 sales. Nispel is also worried that Apple is still facing potential tariff risks and increased competition in China. AAPL 1Y mountain Apple stock performance. Apple’s Siri upgrade delay also prompted Morgan Stanley earlier this week to cut its 2025 iPhone shipments outlook and trim its price target on shares, with the firm calling for “a more gradual path to shortening of iPhone replacement cycles.” To be sure, most Wall Street analysts covering Apple remain bullish. The average $249.97 price target suggests more than 18% upside from current levels, per LSEG. Further, 31 out of 46 analysts in total have a strong buy or buy rating on the stock.
