Apple stock fell Thursday after brokerage firm Jefferies downgraded it to hold from buy.
Jefferies analyst Edison Lee assumed coverage of Apple stock with a neutral rating. In a report titled, "Waiting for the Apple to Ripen," Lee said the consumer electronics giant won't truly benefit from its artificial intelligence moves, branded Apple Intelligence, until the 2026-27 time frame.
"We like Apple Intelligence long term, as Apple is the only hardware-software integrated player that can leverage proprietary data to offer low-cost, personalized AI services," Lee said. "But smartphone hardware needs (a) rework before being capable of serious AI, with (a) likely timeline of 2026/27. The high expectations for iPhone 16/17 are premature, in our view."
Lee set a price target on Apple stock of 212.92. On the stock market today, Apple stock dipped a fraction to close at 229.04.
Lee said his firm's analysis suggests weaker-than-expected initial demand for the iPhone 16 smartphones.
Apple began selling the new handsets on Sept. 20. However, the first batch of Apple Intelligence features won't be available until later this month in a software update.
Apple Stock In Consolidation Pattern
Even so, a true AI-capable iPhone with high-speed memory and more advanced processors is probably two to three years away, Lee said. "The iPhone 16 does not have the hardware (specifications) to carry out sophisticated AI functions."
He added, "To expect an accelerated smartphone replacement cycle now due to AI is premature," he said.
Apple stock is on the IBD Tech Leaders list.
Meanwhile, Apple stock has been consolidating for the past 13 weeks at a buy point of 237.23, according to IBD MarketSurge charts.
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