Apple’s shares tumble following a significant downgrade from Jefferies, erasing $97 billion in market value amid concerns over iPhone pricing and profit margins despite strong quarterly results.
Apple shares fell sharply on Monday after Jefferies cut its rating on the stock to Underperform, wiping about $97 billion off the company’s market value as investors reassessed the outlook for iPhone pricing and margins. The move came even after Apple had reported a strong June quarter, underlining how much of the stock’s premium valuation already depends on confidence that growth can continue. Shares were last down 2.11% at $306.44 in regular trading, leaving Apple with a market capitalisation of about $4.47 trillion.
Jefferies analyst Edison Lee reduced his price target to $263.66 from $285.56, arguing that higher memory costs and weaker pricing flexibility could pressure profitability. The firm also said Apple may have abandoned an all-glass iPhone project because of poor production yields, although Apple has not confirmed that report. The downgrade lands at a sensitive moment for the company, which is still trading on more than 35 times trailing earnings and remains one of the most closely watched large-cap stocks in the market.
The warning contrasts with Apple’s latest results, which were strong by any conventional measure. The company reported revenue of $109.42 billion for the fiscal third quarter, up 16.4% from a year earlier, while net income rose 27.1% to $29.79 billion. iPhone revenue climbed 21.7% to $54.25 billion and Services revenue reached $30.74 billion. Apple said gross margin rose to 50.1%, helped in part by tariff refunds that added about two percentage points. Excluding that temporary benefit, margin would have been closer to 48.1%.
That backdrop helps explain why the stock split opinion remained wide. S&P Global said in May that Apple’s June-quarter performance reflected strong Services growth, better product mix and resilient demand in key markets, including China, where iPhone sales were said to have improved sharply. But KeyBanc Capital Markets turned more cautious in July, downgrading Apple to Underweight and warning that hardware demand was normalising, carrier subsidies were weakening and Services growth could slow if device upgrades soften. The firm also argued that Apple’s valuation looked stretched against its own history.
For now, the investment case appears to hinge on whether Apple can sustain its margin profile while costs rise. Management had already signalled that operating spending would remain elevated as it invested in artificial intelligence and product development, and some analysts have questioned whether that outlay will be matched by enough near-term hardware demand. With Wall Street still split on how much growth is embedded in the share price, Monday’s sell-off showed that even strong earnings may not be enough to calm concern over what comes next.
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