Apple Inc. is facing a fresh wave of skepticism from Wall Street. Reports that the company's much-anticipated all-glass iPhone, conceived to commemorate the device's 20th anniversary, have been scrapped, prompting Jefferies to downgrade Apple stock to "underperform" and cut its price target to among the lowest on the Street.

Jefferies analyst Edison Lee on Monday downgraded Apple from "hold" to "underperform," lowering the price target from $285.56 to $263.66, implying roughly 16% downside from the current share price. Lee's downgrade is based on supply chain checks, which indicate Apple's planned all-glass iPhone, originally slated for a September 2027 launch, has been cancelled due to "low production yields." This device was expected to significantly boost iPhone pricing and profit margins, with an average selling price of around $2,060.

Lee described the cancellation as a "major setback to Apple's plans to boost profitability through higher-priced models." He also expressed caution regarding the slow pace of Apple's AI strategy and cost pressures on components for the iPhone 19 Pro Max. Apple shares fell 1.5% on Monday, underperforming the Nasdaq Composite's 0.3% decline.

The All-Glass iPhone's Demise: A Blow to the Premium Strategy

According to Jefferies, Apple had envisioned an all-glass enclosed iPhone, fulfilling former Chief Design Officer Jony Ive's vision of a "single slab of glass" smartphone. The project was first reported by media in 2025, and Apple quietly filed a patent for a "six-sided glass enclosure" in 2019, but the company never publicly commented on the rumors.

However, Jefferies' supply chain checks reveal the project has been cancelled due to "insufficient production yields," meaning the rate of defect-free units failed to meet mass production standards. Edison Lee believes this shows that "introducing new form factors to drive a higher average selling price for the iPhone is proving more difficult than expected."

The all-glass model was originally set to debut in September 2027, coinciding with the iPhone's 20th anniversary, with an estimated average price of $2,060, far exceeding the $1,199 starting price of the iPhone 17 Pro Max. Lee noted that Apple's plan was to extend the all-glass feature to future Pro and Pro Max models to continuously raise the average selling price and profit margins. The cancellation of this model has effectively blocked that price hike path.

With the all-glass model out of the picture, Lee believes the only remaining driver for Apple to increase iPhone average selling prices is the long-awaited foldable iPhone. Investors have high hopes for this product, with some analysts predicting strong initial consumer demand and labeling it a "major growth engine" for Apple.

However, Lee remains skeptical. He argues the foldable iPhone is likely to be a "niche product" and predicts the "iPhone 18 Fold" will be priced between $2,199 and $3,099, depending on storage configuration, due to high memory chip costs. This high price point could limit its meaningful contribution to overall sales and revenue.

Soaring Memory Costs and a Lagging AI Strategy Compound the Woes

The cancellation of the all-glass iPhone further reduces Apple's flexibility in dealing with rising memory costs.

According to a recent report from Morgan Stanley analyst Erik Woodring, Apple's average DRAM cost is expected to rise approximately 370% between fiscal years 2025 and 2027, increasing the likelihood of a $200 price increase across the iPhone 18 lineup.

In June, Apple raised prices on its MacBook and iPad product lines, with CEO Tim Cook characterizing such increases as "inevitable."

Meanwhile, Lee remains cautious about the pace of Apple's AI strategy. Supply chain information suggests Apple is considering boosting the iPhone 19 Pro Max's memory from 12GB to 16GB to support more complex on-device AI models.

But Lee argues that the slow rollout of Apple Intelligence makes it difficult for Apple to justify the cost of this hardware upgrade, thereby compressing the space to support premium pricing through an AI narrative.

Bearish Voices Grow, but Most Analysts Still Maintain Buy Ratings

Jefferies' downgrade is not an isolated incident.

KeyBanc analyst Brandon Nispel downgraded Apple in July from "sector weight" to "underweight," citing that Apple's growth momentum had begun to stall after accelerating in 2025. He suggested that weak iPhone sales could drag down other hardware categories, making the stock valuation "appear elevated over time."

Apple's shares had already experienced a notable pullback due to earnings pressure. The disappointing third fiscal quarter earnings report last month triggered a sell-off that wiped out $359 billion in Apple's market value, allowing Nvidia to surpass Apple to become the world's most valuable company.

Despite this, Wall Street's overall confidence in Apple has not yet wavered. According to FactSet data, of the 51 analysts surveyed, 32 maintain a "buy" or equivalent rating, 14 rate it as "hold," and only five—including Lee and Nispel—hold a negative view.

Apple shares have risen approximately 34% over the past 12 months and are up more than 15% year-to-date, still slightly outperforming the broader market.