Apple's AI Advances Can't Offset Chinese Market Slowdown, Says Analyst

Apple Inc AAPL may be riding the Edge AI wave, but it's also facing a riptide of headwinds. JPMorgan analyst Samik Chatterjee sees currency woes, China struggles, and lukewarm AI adoption as hurdles for the tech giant's upcoming earnings—and warns that guidance could disappoint investors.

China's Chilling Effect

Apple's grip on China is loosening, and Chatterjee isn't mincing words. "Share loss in China to likely continue with the company already past its product cycle peak and with the consumer subsidies from the local administration to enable smartphone replacement for low to mid-tier phones, which excludes high-end smartphones."

With Beijing's push to boost domestic brands, Apple is losing its competitive edge in a critical growth market.

Read Also: Apple Gets Rare Downgrade From Jefferies, Analyst Warns On Slowing Revenue Growth, Missed Forecasts, And Falling iPhone Demand

AI: The Game-Changer That Isn't (Yet)

Despite Apple's push into Edge AI, Chatterjee sees a slow build rather than a sudden spike in demand. "Limited traction yet for the AI features rolled out increasing the likelihood of flattish unit sales as we go through the upcoming quarters, although downside to unit sales remain limited given trough replacement rates already."

Simply put, consumers aren't rushing to upgrade just for AI, leaving iPhone sales stuck in neutral.

Strong Dollar, Weak Outlook?

The dollar's strength is another thorn in Apple's side, making overseas sales less profitable. "Stronger USD to increase headwinds for Apple to navigate in the coming quarters, given limited appetite to adjust pricing outside of new product launches."

This could mean Apple absorbs the hit rather than passing costs to customers, squeezing margins further.

Apple Earnings Outlook: A Tough Climb

Chatterjee expects Apple's first quarter earnings to come in at $2.33 per share on $123 billion in revenue—just shy of consensus estimates. But it's the guidance that could really spook investors. Revenue for the quarter is expected to land at $94.8 billion, trailing consensus expectations, as China's smartphone subsidies and AI's slow ramp-up weigh on demand.

Still, Chatterjee isn't ditching Apple altogether. He maintains an Overweight rating, banking on Apple's premium valuation holding up thanks to its ecosystem and AI ambitions.

However, he trims his December 2025 price target from $265 to $260, warning that earnings revisions from a softer guide could pressure shares in the near term.

Apple may have long-term AI potential, but for now, it's a battle of innovation versus macro headwinds. And according to Chatterjee, the next earnings report could be a reality check for investors.

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