JP Morgan believes Apple stock might get its mojo back in the next few months due to historical data, the upcoming iPhone 17 release, and lukewarm expectations from Apple’s conference, which the company can surpass and impress investors.
Apple’s 2025 struggles
One of the most valuable companies in the world did not have a great year, with the stock falling by 17% in the year, underperforming the broader market.
The benchmark S&P 500 was up by 1.5% in the same period.
Tim Cook led the company’s shares have been under pressure due to US President Donald Trump’s tariffs hurting its highly international manufacturing base.
As US US-China trade standoff intensified, Apple exported more phones from India to counter it, but soon, uncertainty hit that plan as well.
In May, Trump threatened a 25% tariff on foreign-made iPhones as he wants the company to manufacture iPhones in the US.
Analysts said the shift to US production will be difficult as it will push the price of the iPhone from $1000 to $3,500.
Apple’s iPhone exports from India increased by 76% in April, and Chinese exports saw a 76% fall.
Historical performance to rescue Apple?
Samik Chatterjee, JP Morgan analyst, pointed out that in six out of the last seven years, Apple shares have outperformed the S&P 500 from June to mid-September.
The analyst cites the outperformance to investor excitement from the new iPhone’s release.
Chatterjee noted that Apple stock has surged 18% on average in the last 7 years in this time period, compared to the S&P 500’s less than 6% rise.
New iPhone and low AI expectations
The analyst also wrote that investors have low expectations from Apple’s upcoming Worldwide Developers Conference.
Due to the low expectations, shares can rise if there is positive development from the conference, he added.
“We believe low expectations from investors into WWDC this year, as well as for the iPhone 17 cycle, can set up the shares for a typical outperformance into the Fall iPhone launch timing.” Chatterjee wrote.
Chatterjee wrote that Apple can reassure investors through capability offerings for artificial intelligence at the event.
Apple has fallen behind in the AI race, with most of the AI features it announced last year still not available to users.
The company is facing a class action lawsuit for false advertising of AI features in the iPhone 16.
The analyst said the stock would outperform if iPhone 17’s volume cycle expectations improve as it approaches its launch.
According to Chatterjee, if perception on tariffs changes, leading to lower than expected tariffs and price change for iPhone 17 being lower than previously predicted, it could also lead the stock to rise.
However, Chatterjee added that the lack of a trade deal between the US and China could be an overhang for the stock.
Recently, Needham downgraded Apple to hold, citing AI weakness and competitive threats.
According to TipRanks, 16 out of 29 analysts in the last three months have given a buy rating for the stock.
9 analysts had a hold rating while 4 had sell ratings.
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