Apple (AAPL) doesn't face meaningful risks from tariffs after new government guidance exempted smartphones, KeyBanc Capital Markets said in a report Sunday.

Analysts said Apple is still struggling with its artificial intelligence strategy and might have to deal with potential negative implications on its services businesses from the US Department of Justice lawsuit against Alphabet's (GOOG) Google.

The company is facing stiff competition in international markets, especially in China, and together with restrictive consumer spending, consensus growth expectations remain too high for fiscal 2026, according to the note.

The brokerage said it recently lowered its price target to $170 per share amid tariff risks, but the latest exemption could mean its "downside thesis has played out."

KeyBanc upgraded the stock to sector weight from underweight.

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