Apple falls after KeyBanc downgrades on slowing hardware demand

Apple shares retreated about 1.7% to $311.91 on Tuesday after KeyBanc Capital Markets analyst Brandon Nispel downgraded the stock to Underweight and set a $250 price target, implying roughly 21% downside from Monday’s close.

In a research note, Nispel wrote that KeyBanc’s spending checks pointed to “another month of below-trend growth” for Apple in June, driven by sluggish iPhone sales and softer demand for Macs and iPads. He noted June indexed hardware spending fell 2% month over month versus a three-year average growth rate of 9%, which KeyBanc said suggests U.S. demand has normalized after last year’s tariff-driven surge.

Nispel warned the hardware softness could spill into Apple’s higher-margin services business, including iCloud and Apple Music. He flagged expectations for slower iPhone production, weaker upgrade activity in the United States and reduced device subsidies as headwinds for future growth. He described consensus forecasts for iPhone, Mac, iPad, Wearables and Services through 2027 as too optimistic and said they may require downward revisions.

Market reaction was muted. Shares pared losses later in the session and were trading down about 0.46% at the time of reporting. The stock has risen 1.4% over the past week, 6.4% over the past month and 51% over the past year. Wall Street maintains a Moderate Buy consensus, with an average 12-month price target of $327.20.

Some analysts maintained bullish views. Morgan Stanley’s Erik Woodring reiterated a Buy rating and kept a $360 price target, writing that demand for major devices is relatively insensitive to price changes, allowing Apple to raise prices without materially weakening unit demand while protecting margins. Woodring expects higher iPhone pricing and new AI-focused products to support earnings growth into fiscal 2027. Evercore ISI’s Amit Daryanani also kept a Buy rating with a $365 price target.

Apple recently announced price increases for some MacBook and iPad models as memory component costs rose. The stock trades at about 36 times expected fiscal 2026 earnings, above its five-year average and the broader S&P 500, a valuation point KeyBanc highlighted when questioning how much disappointment the market can absorb.

The downgrade centers on KeyBanc’s view of slowing hardware demand, potential pressure on services revenue and limited downside protection given the current valuation. Analysts remain divided on whether price increases and new products will offset weaker unit growth in coming quarters.