What Wall Street gets wrong about Apple in rare sell call on the stock
A new Wall Street analyst report says investors should sell Apple stock. Jim Cramer thinks otherwise. The news MoffettNathanson downgraded Apple stock to sell from neutral Tuesday and cut its price target to $188 per share from $202 — implying roughly 23% downside from Monday’s close. The analysts pointed to concerns about Apple’s prospects in China and the U.S. government’s antitrust action against its search partner Google, owned by fellow Club name Alphabet . “A Federal Judge (Amit Mehta) had declared the payments Google makes to Apple each year for Google’s preferred (default) search position to be illegal. Apple’s position in China has steadily weakened,” the analysts wrote in a note to clients. “While the incoming Trump Administration is likely to exempt Apple from import tariffs, there is a genuine risk that Apple will be targeted with retaliatory tariffs in countries negatively impacted by U.S. import duties in unrelated categories.” MoffettNathanson also cited a “lukewarm response from consumers” to Apple’s new suite of generative artificial intelligence features for the iPhone and other devices. “Not only have we not seen any sign of an upgrade cycle … but we have seen growing evidence that consumers are unmoved by AI functionality.” The AI tools, dubbed Apple Intelligence, are available on new iPhone 16 models, the iPhone 15 Pro and Pro Max, and certain iPads and Macs. In addition, the analysts wrote, “Over the past two months, Apple’s shares have resumed their ascent, and the valuation gap between Apple and the S & P has inflected higher.” Big picture Sell ratings on Apple shares are rare, and this one comes after the stock’s largely stellar performance in 2024. Shares jumped 30.1% last year, compared to the S & P 500’s 23.3% gains. Most of Apple’s gains come in the second half of 2024, though, ignited by optimism around Apple Intelligence. Investors have expected that AI integration could give device sales a much-needed boost as users trade up to newer iPhone 16s. AAPL 1Y mountain Apple performance over the past 12 months While the slower-than-initially-expected rollout of AI on iPhones has pushed back the refresh cycle, it might serve to elongate it and actually benefit Apple sales in the longer run. Apple shares closed at a record high of $259.02 each on Dec. 26. Since then, however, the stock has retreated more than 5%. In the early days of 2025, Apple has dropped about 3%. Bottom line Pushing back on MoffettNathanson’s sell call and AI criticism, Jim argued that Apple didn’t have to accrue massive costs from developing and adopting artificial intelligence like its Magnificent Seven peers did. That’s because Apple utilizes OpenAI’s industry-leading large language models. “Apple is the free rider of all time,” Jim said on Tuesday. “They didn’t have to spend anything on AI. It’s brilliant.” OpenAI is backed by Club name Microsoft . Jim also dismissed concerns about the U.S. government’s regulatory scrutiny of Google, which could threaten $25 billion annually in search payments to Apple. The litigation could take years to play out in the courts. It’s too soon, therefore, for investors to make a decision based on the case. The Club reiterated our “own it, don’t trade it” thesis on the stock. We won’t blame anyone for taking profits in Apple stock or trimming based on the need to manage the size of their positions. It’s what we did in late December when we offloaded some Apple shares for a big profit and brought the weight of the position back below 6%. After all, we don’t want any one stock to have too much influence on the entire portfolio. In the latest Apple trade alert, we wrote, “That discipline trumps conviction – an important part of our modus operandi that we actually started the year off discussing . It’s fitting that we should close out a great 2024 with exactly that in mind.” On the first trading day of 2024, we trimmed Apple and a bunch of other huge 2023 winners. It coincided with a Barclays downgrade of Apple to sell and a slew of cautious Wall Street analyst commentary . While the stock eventually hit a 52-week low of $164 in mid-April, an in-depth look back in October at Apple sell calls in recent years revealed that it’s been a fool’s errand to try to time when to get out and when to get back in as the stock continued to make higher lows and higher highs. Jim said that’s why he advocates holding Apple and not trying to play the market timing game. (Jim Cramer’s Charitable Trust is long AAPL, GOOGL, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Apple CEO Tim Cook gives an interview at the Fifth Avenue Apple Store on new products launch day on September 20, 2024 in New York City.
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A new Wall Street analyst report says investors should sell Apple stock. Jim Cramer thinks otherwise.