A Jefferies analyst thinks Apple’s stock could see ‘stable’ performance, but he voices concerns about tariffs and future sales in his latest upgrade to a hold rating

An analyst noted that iPhone discounts in China could help June-quarter numbers, but he worries about sales trends in the second half of the year.

Jefferies analyst Edison Lee has been busy this year, moving to a bearish stance on Apple Inc.’s stock in January, before shifting to a neutral position in April and going back to bearish less than a month later. And now he’s headed to neutral again.

In upgrading Apple shares to hold from underperform on Tuesday afternoon, Lee wasn’t quite effusive, noting that Wall Street has a “benign” view of the tariff threat to Apple, an outlook he thinks is “likely overly optimistic.” But Lee also believes good June-quarter results “could keep the stock stable” in the near term.

What could drive those June-quarter numbers? Lee said that Apple has run promotions in China as it looks to defend its turf there. “Chinese consumers are still willing to buy [the] iPhone at lower prices,” he noted. Meanwhile, demand in the U.S. could have been “pulled forward” in April and May as consumers tried to get ahead of tariff developments. Third-party data cited by Lee showed upbeat global sales trends in April and May, and he thinks “a positive surprise” could be in store when Apple reports its next earnings.

That said, investors often focus on the future more than the past, and Lee thinks the company’s guidance for the September quarter will be “subdued,” while unit sales growth of iPhones could be “flattish” in the second half of the year.

“Given the sales strength in the [June quarter], we expect demand in the [September quarter] to suffer,” he wrote in his note to clients. The company is expected to come out with the iPhone 17 this fall, but Lee is worried about “a lack of new features,” while writing that “AI is not yet a game changer.”

On the profit side, he noted the potential for a roughly 7% hit to earnings per share this fiscal year and next fiscal year even if the U.S. imposes just a 10% tariff on India, a 20% tariff on Vietnam and a 30% tariff on China — rates less severe than under scenarios outlined earlier in 2025. And that’s before taking into account possible sector-specific tariffs focused on semiconductor technology.

Apple’s stock has struggled to find its footing lately. Over a three-month basis, it’s the only “Magnificent Seven” stock in negative territory — down about 7%. Looking at that group of large technology-related stocks over the year to date, only Tesla Inc.’s stock has performed worse than Apple’s, with a 25%-plus decline versus a 17% drop for Apple.

That said, Apple shares were the strongest performer of the bunch on Tuesday, as technology stocks in general sold off. Apple’s stock ended the day up 1.3%, with it and Amazon.com Inc.’s stock the only “Magnificent Seven” gainers.

Investors could be rotating into names that recently underperfomed, or this could be a continued reaction to a Bloomberg report from Monday afternoon that said Apple was thinking about using technology from OpenAI or Anthropic to fuel its Siri voice assistant.

”We view a deepening of ties with external partners as a good sign, as it provides a hedge against [Apple’s] internal initiatives that were originally announced at WWDC 2024 (promised to be available this year) that is now delayed to at least 2026,” CFRA’s Angelo Zino wrote on Tuesday.