Apple downgraded by Jefferies as all‑glass iPhone plan scrapped

Apple’s stock fell about 2% on Monday after Jefferies lowered its rating to Underperform and cut the price target to $263.66, citing supply‑chain checks that suggest the rumored all‑glass iPhone slated for a 2027 anniversary launch has been cancelled because of low yields [1]. The downgrade highlights concerns that Apple may lose a pricing lever just as component costs, especially memory, are climbing.

All‑glass iPhone cancellation and margin outlook

Jefferies analyst Edison Lee said the all‑glass body was intended to migrate to future iPhone Pro and Pro Max models, a move that would have supported higher average selling prices and margins [1]. With the project apparently scrapped, Apple loses a potential “premium pricing lever” at a time when memory component prices are surging, a factor Lee believes could compress margins if Apple cannot offset costs elsewhere [3]. The analyst also flagged Apple’s slower rollout of its Apple Intelligence AI suite, arguing that weaker on‑device AI features make it harder to justify higher memory specifications [1].

Broader context: earnings strength and China strategy

Despite the downgrade, Apple reported a 16% year‑over‑year revenue increase to $109.42 billion in its fiscal third quarter, beating estimates and driven by a 22% rise in iPhone sales [3]. The company also announced testing of memory chips from Chinese supplier CXMT for iPhones and MacBooks sold in China, a move aimed at mitigating component shortages linked to AI‑driven demand [1]. Apple’s expansion into China’s AI market includes enabling mainland users to connect Alibaba’s Qwen models with Siri, underscoring a dual focus on hardware sourcing and AI partnerships [1].

Market reaction and analyst sentiment

Jefferies’ downgrade is rare; only three other analysts currently recommend selling Apple, while 19 maintain buy ratings [2]. The firm’s new price target of $263.66 sits near the low end of Wall Street forecasts, contrasting with a consensus target of $245.17 from 30 analysts [2]. Apple’s share price has risen more than 15% so far in 2026, but momentum softened after the latest earnings, reflecting the market’s sensitivity to margin‑related risks [1].

What to watch

• September 2027 launch – Confirmation of any new premium iPhone design, including a possible foldable model, could restore pricing momentum.
• Q1 2027 earnings – Guidance on iPhone revenue growth and memory cost trends will test the downgrade thesis.
• CXMT memory chip rollout – Progress on Chinese memory integration may affect supply‑chain resilience and margin outlook.

The downgrade underscores a pivotal tension for Apple: sustaining premium pricing amid rising component costs without the anticipated all‑glass design boost, while its strong sales and strategic moves in China keep the broader outlook less certain.