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Apple shares moved higher in early Monday trading, matching U.S. stocks's upside move tied to investors' hope for relief from the Trump administration's tariff threats, but the tech giant is likely face serious headwinds in coming months following its fumbled AI strategy.
Apple (AAPL) remains firmly in correction territory in the wake of a 15% slump from its late-December peak. The move lopped more than $630 billion from its market value, as investors retreated from the Magnificent 7 tech stocks and amid concern about the rollout of its Apple Intelligence AI system.
Last week, in fact, Chief Executive Tim Cook reportedly orchestrated a rare shakeup of his top executive ranks, tapping Vision Pro creator Mike Rockwell to oversee product development for Siri.
That move followed a bungled upgrade of the tech giant's virtual assistant and delays in the release of features designed to enhance its artificial-intelligence features and drive sales of its newly released iPhone 16.
Wedbush analyst Dan Ives, a committed Apple bull who carries a $325 price target and an outperform rating on the tech giant, estimates its AI delays will remove around 10 million iPhone handset sales from its fiscal 2025 tally. But he sees that total improving over the following fiscal year, which begins in October.
That said, any further delays in the Apple Intelligence rollout, or even the release of underwhelming features that fail to capture users' imagination, will likely erode confidence in the group's ability to entice users to buy into the next round of smartphone upgrades.
Apple prepares for impact of Trump tariffs
Apple is also bracing for the impact of tariffs on goods from China, which currently come with a 20% levy. And that figure could increase as President Donald Trump ramps up his broader economic strategy by targeting nations that have persistent trade surpluses with the U.S.
Morgan Stanley analyst Erik Woodring, who reiterated his overweight rating and $252 price target in a note published Monday, is seeing an increase in China-based hardware production in March. But he argues this likely results from trade-war issues between Washington and Beijing.
Related: Top analyst overhauls Apple stock price target amid key iPhone challenge
"While we highlighted increased iPhone assembly visibility and China's electronics subsidies as potential upside risks last month, we believe the increase this month reflects Apple pulling forward production to mitigate U.S./China tariffs," he added.