The China Problem No One Saw Coming

In a rare move, three major Wall Street firms simultaneously downgraded Apple to 'Sell' after iPhone shipments missed estimates by 8 million units in Q4. The company's China exposure has become its Achilles' heel as domestic brands like Huawei and Xiaomi capture market share with aggressive 5G pricing and government support. Services revenue grew 12% but failed to offset hardware weakness. Apple's vaunted $110 billion buyback program provided temporary support but analysts now question its sustainability. The launch of Apple Intelligence features has been delayed multiple times, eroding consumer excitement.

Is the Growth Story Over?

Despite maintaining premium pricing power in Western markets, the growth story appears increasingly dependent on saturated markets. The stock now trades at its lowest forward P/E since 2022, but many believe even this valuation is too rich given the headwinds. iPhone upgrade cycles have lengthened from 2 years to nearly 4 as consumers find less compelling reasons to upgrade. The Vision Pro mixed reality headset has sold fewer than 500,000 units — far below expectations. Meanwhile, competitors like Samsung are gaining ground in the foldable phone market that Apple has yet to enter.