• Jefferies upgrades Apple (AAPL) from Underperform to Hold, raising PT to $188.32 from $170.62.
  • China-driven demand expected to lift June quarter revenue and earnings above forecasts, but iPhone growth may stall in H2 2025.
  • Apple shares rise 1.2% premarket as near-term optimism outweighs services revenue concerns.

A Cautious Upgrade for Apple

Jefferies has shifted its stance on Apple Inc. (AAPL), upgrading the tech giant to Hold from Underperform and lifting its price target to $188.32, citing stronger-than-expected demand in China. The firm projects Apple’s June quarter revenue could grow 8% year-over-year, with earnings per share climbing 10%, driven by a rebound in Chinese consumer spending. However, analysts tempered enthusiasm by warning of flat iPhone unit growth in the second half of 2025 and potential headwinds for services revenue, which hit a record $26.6 billion last quarter.

Premarket trading reflected cautious optimism, with Apple shares up 1.2% following the report. "A strong June quarter could provide near-term stability," Jefferies noted, though it emphasized that pull-forward demand in China might not sustain momentum into 2026. The upgrade comes as Apple navigates new US-China tariffs, which threaten supply chain costs but have yet to materially impact earnings.

Balancing Short-Term Gains and Long-Term Questions

While the iPhone remains Apple’s core revenue driver, Jefferies highlighted reliance on services—now 28% of total revenue—as both a strength and a vulnerability. Regulatory scrutiny and macroeconomic pressures could dampen growth in subscriptions and digital transactions. Meanwhile, wearables sales have softened, and analysts see limited innovation catalysts for the iPhone 17 cycle.

Apple’s resilience in turbulent markets has historically shielded its valuation, but Jefferies’ muted outlook underscores broader sector challenges. "The stock’s premium pricing leaves little room for missteps," one trader remarked, echoing concerns about plateauing hardware sales. The company’s efforts to diversify manufacturing outside China may mitigate tariff risks, but execution remains critical.

—Reporting by ROIC AI; Apple declined to comment on the analyst note.