Since the start of the year, Apple shares have fallen by more than 8%. It is the only one of the magnificent 7 to be in the red in 2025 and is visibly overtaken by Nvidia in 2nd position among the world’s largest capitalizations. This mixed performance over the past 6 months and the recent decline since its peaks at the end of December 2024 can be explained by the difficulties that the Californian company is going through. Among the uncertainties, note the slowdown in iPhone sales which weighs heavily in the breakdown of Apple’s turnover, the challenges encountered in China, the delay of Siri in terms of AI which pushes it to integrate ChatGPT or further concerns over a $20 billion payment from Google to Apple for default search engine status, which could be threatened by an antitrust ruling from the United States Department of Justice.
Sales Growth and Challenges in China
Apple’s sales growth is expected to be single digit this year, driven mainly by its services business. However, product sales remain stable, especially in China, where Apple faces significant challenges. Trade tensions between the United States and China under the Trump administration could also pose problems (tariffs on products imported from China), although the company could benefit from American exemptions. A deterioration in relations could hurt product sales in an already difficult market for Apple.
AI Integration and Product Insights
ChatGPT’s integration with Siri, announced in December 2024, represents the largest AI update for iOS to date. It is still proof of a marked delay in terms of AI: Apple has not been able to create a conversational AI at the level of that of OpenAI. However, this innovation will undoubtedly improve user experience and drive product upgrades. The launch of the iPhone 17 in September 2025 should benefit from this integration, although the weakness of consumers in China, a crucial market for the Californian firm, could limit this impact.
The dominant position of the App Store
Since January, Kevan Parekh, Apple’s new CFO, replacing Luca Maestri, recently had to answer delicate questions in a London court regarding App Store margins. The plaintiffs claim that Apple makes margins of more than 75% on the App Store, which Parekh disputes, saying those numbers are not accurate. An antitrust lawsuit accuses Apple of monopoly on the applications market, with a demand of 1.75 billion euros for commissions considered excessive. Apple defends itself by touting the advantages of its iOS ecosystem. To comply with European regulations, Apple has introduced measures allowing developers to offer alternatives to the App Store, but controversy persists.
Other complaints include concerns over a $20 billion payment from Google to Apple for default search engine status, which could be threatened by an antitrust ruling from the U.S. Department of Justice.
Challenges in the Chinese market
iPhone sales in China have seen a slowdown, with a 48% drop in November 2024 compared to the previous year. Apple continues to lose market share in China, with an estimated loss of 400 basis points in November. Increased competition from Huawei, which recently launched its new Mate 70 phone, could keep pressure on iPhone sales in China in the near term.
-iPhone production forecast
Apple adjusted its production forecast to reflect sales data and its strategy. iPhone 16 sales remain stable, with a slight increase for the Pro and ProMax models, but a double-digit decline for the 16 and 16 Plus models compared to the previous year. Apple plans to continue selling the iPhone 16 for several years, due to its AI compatibility. For 2025, iPhone 17 production is estimated at 94 million units, with conservative production plans for the 17 Plus model.
Outlook for iPads and MacBooks
Sales of iPad Pro OLED models are lower than expected due to their high price. Apple plans to continue adopting OLED for Pro models, but adoption for Air models is delayed until 2028 or later. The move could benefit Apple’s LCD value chain.
Valuation
Apple faces a range of challenges for 2025, ranging from geopolitical tensions to economic uncertainties to increased competition in China. Although AI integration and product innovations offer opportunities, caution remains for investors. Difficult to pay more than 30 times 2025 profits for single digit growth, say investors.
Warren Buffett vend ses titres Apple
In this regard, we note the well-felt sale by the venerable Warren Buffett who sold the majority of his position in Apple over the past year; he who had initiated his position in 2016 when the company was buying back its own sold-off shares with all its might. If at 13 times profits, the Oracle of Omaha did not hesitate to massively purchase Apple shares in 2016, at 31 times at the start of 2025 and given the current challenges (and potential for years to come), it prefers to lighten his position. And that is understandable.
