Goldman Sachs analysts significantly alter Apple's prognosis.

Following a crucial analyst downgrade due to Apple (AAPL)'s lowered iPhone growth estimates, shares fell again Friday, extending their year-to-date fall to 4.1%. Apple shares have underperformed their Magnificent 7 counterparts this year due to the company's lack of an AI strategy.

Fading demand figures in China, where Apple is offering the iPhone 15 at a deep discount, and its retirement from a decade-long autonomous car project have lowered the group's mood. At the group's annual meeting in Cupertino, Calif., CEO Tim Cook promised investors he would "break new ground" in AI technology this year. After the group's fiscal-first-quarter results report last month, Cook teased a "major announcement" on AI to investors.

Cook's comments came after AFL-CIO pension fund managers' annual meeting proposal to publish Apple's AI intentions and ethical criteria was defeated. Goldman Sachs analysts cut the shares from their 'Conviction Buy List - Directors Cut' but maintained their 'buy' rating, despite believing in the tech giant's iPhone, iPad, and Mac sales.

Goldman noticed "reduced iPhone unit demand from a lengthening replacement cycle and reduced consumer demand for the PC & tablet category." The bank said those factors will "more than offset... Apple's installed-base growth, secular growth in services, and new-product innovation."

Apple is facing headwinds in China, which accounts for nearly a fifth of its revenue, as Beijing bans the device for some government officials and state-backed company employees and Asia-based rivals eat into its market share.

The iPhone 15, which disappointed Apple fans last autumn and failed to catch the popular zeitgeist of past updates, is also losing demand. Global iPhone sales rose 6% to $69.7 billion, surprise expectations and helping group revenue grow 2% to $119.58 billion.

However, December-quarter revenue in China fell 13% to $20.82 billion, missing Wall Street projections by $3 billion. Apple's fiscal-first-quarter profits grew 3.8% to $2.18 per share and $33.92 billion, exceeding analysts' expectations.

In the earnings conference call, Cook said "a lot of work going on internally" on generative AI technologies, a "huge opportunity" for Apple. "Our 'MO' has always been to work and talk about work, not to brag. We'll apply that to this "Cook stated. "But we've got some things that we are incredibly excited about that we'll be talking about later this year."

Apple shares fell 1.6% to $177.89 early Friday, extending their six-month drop to 6.1% and marking the first opening below $180 since November.

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