By Nate Wolf

Analysts at D.A. Davidson downgraded Apple stock after the company's product launch event on Tuesday, citing the company's underwhelming iPhone upgrades and inability to leverage artificial intelligence.

The firm's Gil Luria, Alexander Platt, and Caleb Tammen dropped their rating to Neutral from Buy and maintained their $250 price target in a research note Thursday.

"Following recent product announcements that have left us uninspired, we believe that Apple may not significantly leverage AI anytime soon," the trio wrote. "Until they can redefine their current products or develop compelling new ones, we believe growth will remain constrained under the status quo."

Apple stock was rising 0.8% to $228.59 on Thursday. Shares are down 8.7% this year and 4% since the close on Monday, the last session before the company's much-hyped launch event. The S&P 500 was also up 0.8% Thursday.

Consumers got a first look Tuesday at the new iPhone Air and iPhone 17 series, complete with an A19 chip, a larger display, and a rare price hike. But D.A. Davidson is skeptical that the new releases will drive a major upgrade cycle among buyers who wouldn't otherwise be in the market for a new phone.

"While we don't question the utility of the products, Apple has brought lackluster innovation to their core lineup, starting with the iPhone," the group said.

Apple is hitting turbulence in China due in part to this lack of big-ticket innovations, D.A. Davidson said. Chinese consumers now have "a handful of just-as-good if not better alternatives," the analysts wrote, and the challenges Apple faces there are unlikely to subside soon.

Domestic buyers may not have -- or want to seek out -- the same set of alternatives. But the dynamic Apple faces in China illustrates why an unexpected upgrade cycle in the U.S. is unlikely, D.A. Davidson argued.

The firm also raised concerns about Apple's ability to compete in the AI arms race. It is by no means alone in this respect: Investors have fled the stock this year in part because of repeated delays to better integrate AI into Siri, the company's digital assistant. The Apple Intelligence rollouts that have come, meanwhile, have disappointed D.A. Davidson.

"We believe Apple will be a meaningful participant in AI, just not yet," the firm wrote. "It is clear that the company was either caught off-guard by AI or is genuinely facing innovator's dilemma and cannot innovate on their current products."

Apple didn't immediately respond to Barron's request for comment.

In conjunction with the downgrade, D.A. Davidson upgraded Nvidia stock to Buy from Neutral and lifted their price target to $210 from $195. Among megacap stocks, the AI chip maker provides "greater upside at a lower multiple" compared with Apple, the firm wrote.

Nvidia shares ticked up 0.6% to $178.35 Thursday.

Write to Nate Wolf at nate.wolf@barrons.com

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September 11, 2025 11:34 ET (15:34 GMT)

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