Tim Cook, the CEO of tech giant Apple (AAPL), praised AI lab DeepSeek by calling its language models “excellent” during his trip to China, according to the South China Morning Post. This comes months after DeepSeek’s lower-cost R1 model made a splash in January, which caused investors to worry that spending on AI might slow down. Since then, experts like Nvidia (NVDA) CEO Jensen Huang have said that the market overreacted to the news. However, while Tim Cook praised DeepSeek, investment firm Jefferies flagged some weaknesses for Apple.
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Indeed, Smartphone shipments in China dropped by 17% year-over-year in January, with Apple seeing the biggest decline, at 21%, while domestic brands dropped by 13%. Analysts at Jefferies, led by Edison Lee, noted that despite the launch of the more affordable iPhone 16e, sales have continued to fall after Chinese New Year, which suggests that the new model hasn’t improved demand as hoped – even with support from government subsidies. Jefferies also expects that smartphone sales continued to decline in February and have remained flat throughout March.
Among the major brands, only Huawei and Xiaomi have managed to grow sales. Interestingly, Huawei’s gains are largely driven by heavy discounting, while Xiaomi has gained market share without offering deep discounts. As for the iPhone, Jefferies noted that Apple’s price cuts have mostly been limited to the PDD (PDD) platform. There, discounts on iPhone 16 models have recently increased due to weak demand. However, pricing across other platforms hasn’t changed much. Nevertheless, Jefferies is cautious about overall smartphone demand as a result of weak sales trends.
Is Apple a Buy or Sell Right Now?
Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 17 Buys, 11 Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $249.88 per share implies 14% upside potential.
