Apple (NASDAQ: AAPL) Downgraded to Underperform Amid iPhone and Profitability Concerns
- Jefferies downgraded Apple from Hold to Underperform and lowered its price target to $263.66.
- The firm cited concerns about Apple’s future iPhone pricing strategy amid rising memory and component costs.
- Despite record June-quarter revenue, Apple shares have retreated from their late-July high.
Apple Inc. (NASDAQ: AAPL) is a global technology company known for products such as the iPhone and Mac, as well as digital services including iCloud. Apple shares closed at $302.25 on August 12, 2026, giving the company a market capitalization of approximately $4.45 trillion. MarketWatch
On August 10, Jefferies analyst Edison Lee downgraded Apple from Hold to Underperform and reduced the firm’s price target from $285.56 to $263.66. The new target implies potential downside from Apple’s August 12 closing price.
Jefferies based its downgrade primarily on supply-chain indications that Apple may have abandoned its rumored all-glass iPhone because of poor production yields. The firm viewed the reported cancellation as a setback to Apple’s ability to introduce more expensive iPhone models and protect profitability amid rising memory costs. Apple has not publicly confirmed that it was developing or canceled such a device.
Separately, a Seeking Alpha contributor lowered their personal rating on Apple from Strong Buy to Hold, citing pressure on the company’s underlying gross margin. The contributor projected that Apple’s gross margin, excluding temporary tariff-related benefits, could fall by nearly 3 percentage points over six months. This was an independent opinion and should not be presented as part of Jefferies’ rating action.
The cautious assessments follow Apple’s record results for its fiscal third quarter ended June 27, 2026. Apple reported revenue of $109.4 billion, up 16% year over year, and diluted earnings per share of $2.02. Its reported gross margin was 50.1%, including a favorable impact of approximately 2 percentage points from tariff refunds.
Apple shares closed at a record $339.79 on July 28 before falling to $302.25 on August 12, a decline of approximately 11%. However, measured from July 13 through August 12, the shares declined about 4.7%.
Apple also faces a proposed class-action lawsuit concerning iCloud Private Relay, a privacy feature included with iCloud+. The complaint alleges that WebKit-related vulnerabilities allowed certain websites to obtain users’ actual IP addresses despite Apple’s claims that Private Relay would conceal them. These are allegations that have not yet been proven in court.
