Apple Stock: Major Decline Amid AI Delays, Tariff Concerns

Apple's stock recently experienced its worst trading day since 2022, plummeting 4.85% to $227.48. The sharp decline came amid broader technology sector weakness, with investors increasingly concerned about the company's lagging progress in artificial intelligence. The much-discussed "Apple Intelligence" initiative has faced significant setbacks, with Siri upgrades and other AI features being postponed until an unspecified date next year. This delay is particularly problematic as competitors continue to expand their AI capabilities, potentially eroding Apple's technological edge. Analysts have already downgraded their 2025 iPhone growth projections from 5% to just 2% (approximately 232 million units) as a direct result of these AI implementation delays. The market turbulence has contributed to the S&P 500 dropping nearly 3% since the U.S. elections and falling 4.5% for the year overall.

Tariffs Threaten Profit Margins

Compounding Apple's challenges are looming tariff issues that could significantly impact profitability. Without tariff exemptions, the company faces potential gross margin reductions of approximately 1.7 percentage points, based on estimates that 90% of Apple products are manufactured in China while 40% of revenue comes from the U.S. market. These tariff concerns, combined with AI delays, have prompted analysts to reduce profit forecasts for fiscal years 2025-2027 by roughly 1% each. Despite these headwinds, some analysts maintain buy recommendations for Apple shares, with price targets up to $275, suggesting considerable upside potential despite the current challenges.