Barclays downgraded Apple shares (AAPL) to "underweight" citing concerns about iPhone 15 demand, particularly in China. D.A. Davidson Managing Director Gil Luria, who has a "neutral" rating on the stock. Luria says that "growth isn't going to be very fast" for the iPhone or other hardware categories, arguing that Apple focused on growing its Services business. "Unless the [Apple] unclog their innovation rut, then it's going to be very hard for this company to accelerate growth on the hardware side," Luria claims.

Oppenheimer & Co. Senior AnalystMartin Yang is more bullish. Yang says that Apple is seeing a "deceleration of Apple's share gain momentum in China and developed markets in recent quarters," but that ultimately that issue will correct itself.

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Video Transcript

RACHELLE AKUFFO: Well, we're taking a look at Apple shares, still in negative territory this morning. Down more than 3%. This comes after Barclays downgraded the stock to underweight, and lowered its price target by $1. The bank's analyst Tim Long saying the current iPhone sales are lackluster, and there was a lack of bounce back in Macs, iPads, and wearables.

Our next guests are keeping an eye on Apple's performance and how the company will continue to engage with customers in the US and abroad. Let's bring in Gil Luria, D.A. Davidson managing director, as well as Martin Yang, Oppenheimer senior analyst of Emerging Technologies and Services. A big welcome to you both here.

So it's worth noting that in this note, they talked most specifically about the iPhone 15's performance in China, and really signaled that as broader weakness potentially for the iPhone 16, and some of the other hardware sales. So, Gil, I want to start with you here because you are in that same sort of camp in terms of having a neutral rating, and you have $166 price target. What concerns you most about the reports coming out from Apple?

GIL LURIA: Well, it's not necessarily reports from this holiday season. We're not going to actually know how many iPhones they sold until they tell us. All these checks are very, very partial. There's a lot of moving pieces. There's a week less of sales, but there's better supply chain. There's restrictions in China, but there's some aging hardware in the market as well. So we're not going to actually know.

But what we do know is that growth isn't going to be very fast-- not for the iPhone, or for any of the other hardware categories Apple is really just growing its services business at this point, and that's not enough to generate any more than just low single-digit revenue growth this year, after a pretty flat year last year. That's our concern is that unless they unclog their innovation rut, then it's going to be very hard for this company to accelerate growth on the hardware side.