It’s not often one catches Apple trailing behind, but this time the world’s most valuable technology firm has fallen on hard times, and Wall Street is raising eyebrows. While its Magnificent Seven peers hang around in AI, smart glasses, and the promise of ambient computing, Apple appears to be sitting at home waiting for Siri to load. With its shares down by nearly 20% in 2025, comes a downgrade that essentially amounts to “maybe try again later.”

After being the unshakeable crown jewel of the tech sector, Apple is now under fire, which it hasn’t experienced in years. Apple, being the worst performer among the so-called “Magnificent Seven” stocks in 2025, has lost 19% year-to-date, a sudden decline compared to even Tesla’s 15% and Alphabet’s 12% drops. This seems like a downgrade for Apple.

Needham analyst Laura Martin downgraded Apple’s rating from Hold to Buy on Wednesday on the grounds of the valuation appears too high in light of its current growth track. She also removed her $225 price target in doing so, indicating that Apple’s rich premium price-to-earnings multiple of about 26x is no longer valid in today’s changing technology landscape.

iPhone Development Hits Stillness

It is Apple’s reliance on the iPhone and the absence of a good reason to upgrade that is at the heart of the problem, Martin believes. The analyst wrote,

“We believe that, for Apple shares to work, they must have the catalyst of an iPhone replacement cycle, which we do not foresee in the next 12 months. Until then, we believe that $170-$180/share is a better entry level for Apple shares”.

The hope that Apple’s AI plans, especially its overhaul of Siri, might ignite a fresh upgrade cycle has been dampened by slowdowns. Initially anticipated to arrive with the iPhone 17, these updates are now unlikely to have any significant impact this year. Added to a deceleration in the smartphone market, expectations for Apple’s growth appear to be stalling.

Counterpoint Research this week reduced its global smartphone shipment estimate for 2025 to 1.9%, down from 4.2%, due to mounting uncertainty over U.S. tariffs. That is bad news for Apple, which could be forced to absorb increased supply chain expenses to prevent it from being passed on to price-conscious buyers.

Growing Threat

The looming threat of AI-born devices is quite existential at the moment. Meta and Alphabet are testing smart glasses, and while that’s happening, OpenAI, maker of ChatGPT, has just bought a startup founded by Apple’s legendary former head designer Jony Ive for $6.4 billion. The aim seems to be to create a whole new category of products infused with generative AI. Martin regards this as a genuine and legitimate threat. The same business model that once made Apple invulnerable might become its own weak spot. Martin wrote,

“Because Apple has a 15%-30% take rate of revs [revenue] earned on its hardware, every Big Tech company is building platforms designed to displace Apple’s integrated hardware and software products in a GenAI world”.

Wall Street is at odds over Apple’s Way Forward

Even after the downgrade, not everyone on Wall Street is bearish. BofA Securities analysts believe in Apple’s long-term vision for AI, particularly the transition to perform AI computations directly on devices, which is seen as a benefit for privacy, performance, and user experience. Citi, on the other hand, still carries a Buy rating ahead of next week’s Worldwide Developers Conference (WWDC), citing disappointing investor expectations and Apple’s huge installed base of 2.35 billion.

Apple’s allies counter that the company’s brand power, lock-in to its ecosystem, and customer devotion still provide strong moats, despite the efforts of competitors to push newer, more innovative platforms.

Is Apple a Safe Bet?

Apple’s downgrade solution might be how quickly Apple can catch up. If it ships a substantial AI ecosystem and revitalizes its product lines at WWDC, it could regain investor trust with ease. If it continues to fall behind the Gen-AI arms race, even loyal shareholders might begin looking elsewhere. Apple’s crown hasn’t slipped, but it’s certainly losing its sheen. The company retains unparalleled brand equity, a fortress-like ecosystem, and billions of loyal users. Although the technology landscape is changing rapidly, Apple’s signature minimalism is beginning to resemble conscious restraint rather than savvy restraint.

In an era racing towards AI-native hardware and platform decentralization, Apple’s model threatens to become less refined and more dated. The WWDC may still turn things around, but for the moment, Apple is less a pack leader and more like the behemoth struggling to escape its legacy.