Jefferies downgraded Apple to Underperform from Hold on Friday, warning that market expectations for iPhone sales and the upcoming foldable “iPhone 18 Fold” are too high.
The analysts raised their iPhone shipment forecasts slightly — now seeing FY25/26/27 growth at 7%, 1%, and -1% — but said the stronger demand for iPhone 17 was driven mainly by price incentives, not innovation. The iPhone 17 lineup benefited from no premium price hike and deeper discounts in China, where trade-in values were also the most generous among major markets.
Jefferies said investor optimism has inflated expectations for both the replacement cycle and Apple’s first foldable phone, expected next year. While they believe Apple can design a premium device, they questioned the total addressable market for a US$2,000 foldable, especially as Samsung’s Galaxy Z Fold 7 now offers a nearly crease-free, thinner display.
The firm also noted that Apple’s valuation already reflects an overly bullish iPhone outlook, with their DCF-based fair value of US$205 per share, roughly US$800 billion below the current market cap. Achieving that valuation, they said, would require foldable iPhone demand double their forecasts.
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Apple shares may face near-term pressure as Jefferies challenges market optimism over iPhone and foldable demand. The downgrade could temper broader tech sentiment amid lofty AI and hardware valuations.
