On June 26, 2025, J.P. Morgan adjusted its outlook on Apple Inc., reducing the stock price target from $240 to $230. This revision reflects tempered expectations for Apple’s revenue and earnings over the next 18 months, primarily due to anticipated declines in iPhone demand and challenges within the Services segment.
Anticipated Decline in iPhone 17 Demand
J.P. Morgan forecasts a slowdown in iPhone sales, attributing this to consumers who advanced their purchases to avoid potential price increases from tariffs imposed by the Trump administration. This early buying surge, coupled with minimal hardware innovations in the upcoming iPhone 17, is expected to dampen consumer interest upon its release.
Production projections for the iPhone 17 indicate a 9% decrease compared to the iPhone 16, suggesting that Apple’s 2025 shipments will mirror those of 2024, despite a weaker performance anticipated in the latter half of the year.
Challenges in the Services Segment
The Services division, a significant contributor to Apple’s profit margins, is also facing headwinds. J.P. Morgan’s revised forecast points to reduced growth in this area, which could impact the company’s overall financial performance.
Impact of Tariffs and Supply Chain Adjustments
In response to escalating tariffs, Apple has been shifting its iPhone assembly operations from China to India. While this strategic move aims to mitigate tariff-related costs and protect profit margins, it may not fully compensate for potential volume losses resulting from higher product prices. These supply chain adjustments, though beneficial in the long term, contribute to the current moderation in growth expectations.
Future Prospects Tied to Technological Innovations
Looking ahead, J.P. Morgan anticipates a resurgence in growth with the release of the iPhone 18. This future model is expected to feature a foldable design and advanced artificial intelligence capabilities, potentially revitalizing consumer interest and accelerating revenue growth in fiscal year 2027.
In the interim, Apple’s earnings forecast for 2025 remains largely unchanged, with slight increases in near-term iPhone revenue projections offset by reductions in Services growth and gross margin estimates. Projections for fiscal years 2026 and 2027 reflect concerns over weaker unit growth, potential price sensitivity from future increases, and ongoing tariff-related cost pressures.
Conclusion
J.P. Morgan’s adjustment of Apple’s stock price target underscores the challenges the company faces in sustaining growth amid evolving consumer behaviors, economic pressures, and competitive dynamics. While the iPhone remains central to Apple’s portfolio, the anticipated incremental updates in the iPhone 17 may not suffice to maintain consumer enthusiasm. The company’s strategic focus on innovation, particularly in AI and foldable technology, is expected to play a crucial role in driving future growth and investor confidence.
