“The high expectations for iPhone 16/17 are premature,” as “a lack of material new features and limited AI coverage mean high market expectations (5%-10% unit growth) are unlikely to be met,” wrote Jefferies analyst Edison Lee, who assumed coverage of the stock with a hold rating. The firm previously had a buy rating.

Shares of Apple have rallied around 34% from their April low, with much of the gain reflecting optimism that the AI features will drive consumers to upgrade their phones, re-accelerating revenue growth, but the early signs indicate demand have been mixed.

Lee said he recognises the long-term potential in AI, seeing Apple as “the only hardware-software integrated player that can leverage proprietary data to offer low-cost, personalised AI services.” However, he said the current valuation is “rich” and that AI won’t be a driver in the near-term.

“Smartphone hardware needs rework before being capable of serious AI,” and that has a “likely timeline of 2026/27”.

Wall Street is more cautious on Apple than some other big tech companies. Just 65% of analysts recommend buying the stock, compared with ratios near or above 90% for Microsoft Corp, Nvidia Corp and Amazon.com Inc.