In its latest equity research update, JPMorgan reaffirmed its “Overweight” rating on Apple Inc. (NASDAQ: AAPL) but lowered its 12-month price target from $240 to $230. This downward revision reflects the bank’s expectation of softening demand for the upcoming iPhone 17, valuation recalibrations, and delayed product innovation. The tone from JPMorgan is cautious in the short term, though still constructive in the long run, with a stronger growth narrative anticipated from fiscal year 2027 onward.

Weak Consumer Momentum and iPhone 17 Launch Concerns

JPMorgan analysts noted that demand for iPhones is expected to moderate in the second half of 2025, driven by an early pull-forward of consumer purchases and declining support from smartphone subsidies in China. According to analyst William Yang, the iPhone 17 launch will offer only incremental upgrades, lacking the type of innovation that typically drives strong upgrade cycles.

The bank emphasized that recent demand was inflated due to preemptive purchases amid expectations of price hikes, as well as heavy government subsidies in key Asian markets. With those tailwinds fading, and macroeconomic uncertainty weighing on consumer confidence, Apple is entering a period of digestion, where demand growth is likely to be more muted.

Innovation Delays and iPhone 18 as the Strategic Pivot

The report underscores that Apple’s long-anticipated hardware innovations—such as a foldable smartphone and expanded AI features—have been delayed multiple times, weakening near-term investor enthusiasm. JPMorgan now sees the iPhone 18, expected in FY26, as the likely inflection point for Apple to reinvigorate demand and reassert technological leadership.

With rivals like Samsung, Google, and Huawei pushing aggressively into foldable devices and generative AI capabilities, the pressure is mounting on Apple to deliver. While the firm remains well-positioned from a brand and ecosystem standpoint, JPMorgan warns that the timing of innovation execution is becoming critical.

Revised Growth Outlook: Modest FY26, Stronger FY27

JPMorgan’s updated model reflects a more subdued revenue trajectory for fiscal 2026, with only low single-digit growth expected. However, the bank maintains its view that fiscal 2027 will be a pivotal year for Apple, driven by a new wave of product upgrades and a more material integration of AI across hardware and services.

This scenario supports the investment thesis for long-term investors seeking exposure to AI-led growth, particularly if Apple can align hardware rollouts with next-gen software capabilities. Nonetheless, execution risks remain elevated due to competitive pressure and consumer fatigue in mature smartphone markets.

Manufacturing Shift to India and Short-Term Margin Risks

Another key factor in JPMorgan’s outlook is Apple’s ongoing shift of production capacity from China to India. While this move aims to de-risk supply chains and reduce geopolitical exposure, it introduces near-term margin headwinds. Initial setup costs, labor training, and logistics complexity in India are likely to weigh on operating efficiency, potentially impacting gross margins for the upcoming iPhone 17 cycle.

Moreover, with tariffs and trade tensions still lingering, Apple may have limited flexibility to pass costs on to consumers through price increases. These dynamics complicate the profit outlook in the near term and contribute to JPMorgan’s cautious stance.

Valuation Adjustments and New Price Target

In tandem with its downward revision to earnings estimates, JPMorgan is also reducing its valuation multiple slightly to better align with the current macro backdrop and lowered profitability assumptions. The updated price target of $230 reflects a more tempered upside from current levels, but still supports the “Overweight” rating for investors with a multi-year horizon.

The report does acknowledge that Chinese subsidies and continued strength in Apple’s services segment may support the company’s financial results for Q3 and Q4 of 2025. However, upside potential is likely to remain constrained until more meaningful product differentiation materializes.

Final Takeaway: Short-Term Headwinds, Long-Term Optionality

In summary, JPMorgan adopts a more conservative near-term outlook for Apple, based on declining iPhone momentum, margin pressures from manufacturing shifts, and delayed innovation cycles. However, the bank’s long-term view remains constructive, contingent on successful execution of foldable designs and AI integration by FY27.

Despite near-term softness, Apple retains a loyal global customer base and maintains a strong position in the premium hardware and services space. The question now is whether Apple can reignite growth without external catalysts like pandemic-driven demand or extraordinary subsidies. Investors will be closely watching the company’s next product events and developer initiatives to gauge the pace of innovation and monetization.

The revised price target of $230 reflects JPMorgan’s belief that while Apple is not facing structural decline, its premium valuation must be justified by more than brand loyalty and ecosystem stickiness. With FY27 shaping up as the next major growth inflection point, all eyes are now on Apple’s ability to deliver the next leap forward.