Apple's Stock Rally May Not Be Sustainable, Warns Jim Cramer: 'That's A Much Less Inspiring Kind Of Rally'

Apple Inc. AAPL experienced a stock rally on Monday, but CNBC host Jim Cramer is skeptical about its sustainability.

What Happened: Cramer expressed his doubts about the longevity of Apple’s stock rally, which was fueled by an analyst’s upgrade. He cautioned investors to hold off on purchasing Apple shares, reported CNBC on Monday.

On Monday, Bernstein‘s Toni Sacconaghi upgraded Apple shares from neutral to buy, citing the stock’s potential for a robust iPhone 16 cycle and a temporary downturn in China. Despite this, Cramer advised investors to wait and see, especially with Apple’s earnings report due on Thursday.

“Unlike Toni, I want you to own Apple, not trade it, even as I suspect this quarter will be weak and the next quarter will be worse,” Cramer said. “But I’m with him that you should buy the stock — I just think you need to wait it out, because now you’ve got a Sacconaghi spike on top of what could be a bad quarter.”

Apple’s stock saw a 2.48% increase on Monday, despite low Wall Street expectations for the upcoming earnings report.

Cramer acknowledged Sacconaghi’s expertise but questioned the timing of his upgrade, given his historical skepticism about Apple’s stock.

"Apple rallied on an upgrade from an analyst who, historically, does not have a great understanding of this particular stock," Cramer said. "That's a much less inspiring kind of rally with no staying power to speak of."

See Also: Apple’s Imminent Product Launches Aims to Revitalize Its Stock After a 12% Decline in 2024, Potentially Setting a New Course for Investors

Why It Matters: Apple’s stock has been under scrutiny due to various factors, including its performance in China and the upcoming earnings report. The company is also on the brink of several product launches, which could potentially reshape its trajectory.

Despite the recent rally, Apple’s stock has been on a downward trend, with a 12% decline in 2024. The company is set to unveil new products, including enhancements to the iPad lineup and a potential refresh of the iPhone lineup, at a digital launch event scheduled for May 7.

Apple’s stock has been impacted by slowing iPhone sales and weakness in China, among other challenges. These issues have led to a 13% drop in China sales in the December quarter, with another drop expected in the first quarter of 2024.

Price Action: On Monday, Apple closed trading at $173, reflecting a 2.48% increase. Year to date, the stock has declined by 6.54%, according to the data from Benzinga Pro.

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