Apple Stock Downgraded To Sell On Google, China, Consumer AI Demand

MoffettNathanson downgraded Apple (AAPL) stock to sell from neutral on Tuesday citing concerns over China, a U.S. government antitrust lawsuit versus Alphabet's (GOOGL) Google, and lukewarm consumer interest in new iPhone 16 models with artificial intelligence features.  Apple stock fell on the news.

In addition, since hitting an all-time high of 260.10 on Dec. 26, Apple stock has been retreating. Further, analyst Craig Moffett cut his price target on Apple stock to 188 from 202.

"Pundits who have watched Apple's stock grind higher over the last several months have shrugged off the appreciation as a 'melt up' on no news. But that's not quite right," Moffett said in a report.

He added: "There has been news. It's just all been bad. The iPhone 16 appears to have cooled relative to last year, even as Apple Intelligence is now available and heavily marketed. The Chinese market, important as both an end market and the heart of the supply chain, is vexing. And regulatory risks, most notably the DoJ suit against Google that could threaten Apple's highly lucrative search partnership, might only intensify."

Apple Stock: Consumers Unmoved By AI?

One big question for Apple stock has been whether "Apple Intelligence" – new artificial intelligence features — spurs demand for iPhone 16 models.

"We have seen growing evidence that consumers are unmoved by AI functionality," Moffett wrote.

On the stock market today, Apple stock fell 1.2% to near 242.

Also, Apple reportedly cut iPhone prices in China to compete with domestic rivals such as Huawei.

A federal judge in 2024 ruled that Alphabet violated antitrust laws by engaging in unfair business tactics to dominate the internet search advertising market

Alphabet's payments to Apple, which makes Google the default search engine on iPhones, are a key issue in the Department of Justice antitrust lawsuit. A ruling on remedies in expected this summer. Google will likely appeal.

Further, Apple garners roughly $25 billion in annual search-related revenue from Google.

Apple Stock: Technical Ratings

Meanwhile, Apple stock holds a Composite Rating of 93 from Investor's Business Daily, according to IBD Stock Checkup.

IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Further, Apple stock has an Accumulation/Distribution Rating of B-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.

The rating, on a scale of A+ to E, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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