Apple Inc. (AAPL.US) stock price faces pressure, investors have doubts about iPhone sales and AI prospects.

As Apple Inc. (AAPL.US) is about to release its financial report, more and more investors are starting to bet on its stock price dropping. According to Dow Jones Market Data, as of December, about 157 million shares of Apple Inc. stock (1% of outstanding shares) have been shorted, the highest level since August 2020 when 2.2% of outstanding shares were shorted. In comparison, the average short interest ratio for the S&P 500 index is 2.8%, the highest level since October 2020. Although Apple Inc. stock performed strongly last year, 2025 has not been as promising. Since the beginning of this year, Apple Inc. stock has dropped by about 10%. Several factors have contributed to this trend. Data released by research firm Canalys this month showed that in 2024, Apple Inc.'s iPhone shipments in China declined, causing its market share to drop to third place, behind Vivo and Huawei. On Monday, Jefferies analyst Edison Lee downgraded Apple Inc. stock from "hold" to "underperform the market" and lowered the target price from $211.84 to $200.75. In his research report, he pointed out, "Concerns about soft demand for the iPhone have become a reality." Additionally, he believes that consumers are not interested in the generative AI upgrades for smartphones, which could be detrimental to Apple Inc.'s upcoming financial guidance. Apple Inc.'s AI software "Apple Intelligence" has also not met the company's expectations. This feature announced at the global developers conference in June had a slow global rollout, with it not being launched in the U.S. market until October. Lee and other Wall Street analysts are concerned that "Apple Intelligence" may not be enough to boost iPhone sales in the short term. UBS analyst David Vogt also lowered iPhone sales expectations in early January. They gave Apple Inc. stock a "neutral" rating with a target price of $236. In their research report, analysts quoted the classic line from "Game of Thrones": "Winter is coming," to describe Apple Inc.'s current predicament. However, Apple Inc.'s stock price may still rebound. If Apple Inc.'s December quarterly earnings report released on January 30 shows strong demand, there may be room for the stock price to rise. Nonetheless, Apple Inc.'s current P/E ratio of 29.3 times the expected earnings over the next 12 months means that its financial performance needs to significantly exceed market expectations to support its high valuation. Despite this, many analysts remain optimistic about the future of Apple Inc. Of the 51 analysts surveyed by FactSet, 32 recommend "buy," 14 recommend "hold," and 5 recommend "sell." Wedbush analyst Dan Ives gave Apple Inc. stock an "outperform the market" rating with a target price of $325, representing a 45% increase from Wednesday's closing price of $223.83. He stated in his report that the market's "panic and pessimism towards Apple Inc. are overstated." "Yes, Apple Inc. stock is indeed expensive compared to historical standards, but with 300 million iPhones that have not been upgraded in the past four years, the company is in the early stages of a large-scale, multi-year upgrade cycle." Evercore ISI analyst Amit Daryanani also rated Apple Inc. as "outperform the market" with a target price of $250. In his report on January 17, he expressed optimism about the upcoming financial report and expects iPhone sales to continue to improve throughout the fiscal year. He added, "Investor focus on the iPhone 17 and SE, as well as better-than-expected performance in the Chinese market, could bring more positive sentiment to Apple Inc."