Apple stock falls after Jefferies downgrade on all-glass iPhone concerns

Apple AAPL shares declined about 2% on Monday after Jefferies downgraded the stock, citing concerns that the company's rumored all-glass iPhone project has been scrapped, raising fresh questions about its ability to drive higher-priced device sales amid rising component costs.

Jefferies analyst Edison Lee lowered his rating on Apple to Underperform from Hold and reduced his price target to $263.66 from $285.56, making it one of the lowest targets on Wall Street.

The downgrade comes despite Apple stock gaining more than 15% so far in 2026, although momentum weakened after the company's latest quarterly earnings report triggered a sharp selloff.

Jefferies flags setback for premium iPhone strategy

Lee based his downgrade on the belief that Apple has halted development of its rumored all-glass iPhone after supply chain checks suggested the project was canceled because of low manufacturing yields.

Although Apple never officially confirmed the product, reports had suggested the device could debut in 2027 to mark the iPhone's 20th anniversary. Apple also filed a patent application for a "six-sided glass enclosure" in 2019.

Lee said the cancellation could limit Apple's ability to increase average selling prices at a time when memory costs are climbing.

“More importantly, we believe the plan was to extend the all-glass features to future iPhone Pro and Pro Max models, further raising their average selling price and margin,” Lee wrote.

The analyst also expressed caution over Apple's artificial intelligence strategy, noting that the slower rollout of Apple Intelligence makes it more difficult to justify the higher memory requirements needed for on-device AI features.

Apple expands hardware and AI initiatives

Despite the downgrade, Apple continues to develop new hardware products ahead of John Ternus officially taking over as chief executive next month.

According to a Bloomberg report, the company is working on a screenless fitness band similar to the Whoop device while also evaluating products with different display formats, including round screens and devices without displays.

The company's first foldable iPhone is also expected to launch in September, representing the most significant iPhone hardware redesign in nearly two decades.

Apple recently issued a weaker-than-expected outlook despite reporting solid fiscal third-quarter results.

The company has also faced higher memory costs and increased prices for Macs, iPads and Apple Watches while keeping iPhone pricing unchanged.

China strategy broadens across chips and AI

Apple is also expanding its strategy in China through both hardware sourcing and artificial intelligence partnerships.

According to a Wall Street Journal report, the company has been testing memory chips from Chinese manufacturer CXMT for products including iPhones and MacBooks sold in China as it seeks to address component shortages linked to AI-driven demand.

CXMT is not currently listed on the US Commerce Department's Entity List, although it remains subject to other US restrictions.

Separately, Apple has introduced support allowing eligible Mac users in mainland China to connect Alibaba's Qwen AI models with Siri and Writing Tools.

The move follows Apple's partnership with Alibaba announced last year and is aimed at strengthening its position in China's growing AI PC market.