D.A. Davidson downgraded Apple’s (NASDAQ:AAPL) rating to Neutral from Buy but maintained its $250 price target on the stock.
Shares of Apple were largely flat but in the green premarket on Thursday.
“While we were initially excited about the prospects of Apple’s role in the AI ecosystem and potential major upgrade cycle, it has become clear to us that neither of those are likely to come to fruition in the near-term,” said analysts led by Gil Luria.
The analysts noted that following recent product announcements that have left them “uninspired,” they believe that Apple may not significantly leverage AI anytime soon.
“Until they can redefine their current products or develop compelling new ones, we believe growth will remain constrained under the status quo. Thus, we are downgrading Apple to NEUTRAL while maintaining our $250 price target,” said Luria and his team.
On Tuesday, Apple unveiled its latest line of iPhones, including the new slimmer iPhone Air. The company introduced the iPhone 17, iPhone 17 Pro and iPhone 17 Pro Max, besides the iPhone Air.
The analysts said that they do not question the utility of the products, but Apple has brought lackluster innovation to their core lineup, starting with the iPhone.
“Both the iPhone 16 family, and the recent announcement of the iPhone 17 and iPhone Air leave us questioning whether they are compelling enough to warrant any meaningful upgrade cycle,” said Luria and his team.
The analysts added that even a foldable iPhone, which they expect to be announced next year, may not be a compelling enough reason for the average user to go out of their way to upgrade, “thus we are left unimpressed until the company can either truly innovate on their core lineup or develop a new product category to accelerate growth.”