Jefferies has downgraded Apple (AAPL) stock to ‘Underperform (hold)’, and the firm points to one big letdown behind the move: the special 20th-anniversary all-glass iPhone, expected in September 2027, has reportedly been cancelled.
The downgrade follows Jefferies’ supply chain checks, which indicated that the all-glass iPhone has been canceled due to low yield, marking a significant setback for Apple’s plans to introduce higher-priced models amidst rising memory costs.
Why This Hits iPhone Prices
How will the cancellation of the all-glass iPhone impact Apple? The simple answer is that iPhone average selling prices will now fall short of earlier expectations. Jefferies estimates that the cancellation is expected to lower the compound annual growth rate (CAGR) of iPhone average selling prices (ASP) from 9.0% to 6.8% between FY26 and FY31, also affecting future iPhone Pro and Pro Max models that were set to inherit these all-glass features.
According to the report, this phone was supposed to sell at a high price (~$2,060) and set the stage for future Pro models to also cost more. Without it, Apple loses a key way to raise prices and profit margins.
On top of this, the brokerage firm believes introducing new form factors in the iPhone to increase average selling price (ASP) is proving more challenging than anticipated. Memory chip costs are rising, and as a result, higher DRAM (memory) prices are squeezing Apple’s profit margins across its whole product line, not just iPhones.
Can The Foldable iPhone Fill The Gap?
The foldable iPhone is now expected to be the main contributor to higher ASP and margins, the report added. Estimated retail prices for the iPhone 18 Fold are projected at $2,199 for the 256GB model and $3,099 for the 2TB version, which suggests it will remain a niche product. Jefferies expects only 14 million units in sales forecasts for FY28 for the iPhone 18 Fold.
The other big challenge for the company is the soaring memory cost, which is a big headwind for AAPL. The company announced a nearly 20% price hike for its Mac and iPad products on Jun 25, but not for iPhone yet. Apple will likely struggle to balance volume and margin in the next 18 months, according to Jefferies.
AAPL Stock Price
Apple, with a market cap of nearly $4.5 trillion, is the second most valuable company, after NVIDIA. In the report, Jefferies set the Price Target at $263.66, which is 16% lower than the previous target of $285.56.
Currently, AAPL stock price is around $306, after jumping over 32% in the last 12 months and 12% so far in 2026. In the last month, AAPL has been under some pressure, falling 6% during the period as against 4.8% returns in Nasdaq-100.
Bottom Line
Apple’s plan to sell pricier iPhones is running into real problems. One of its flagship price-boosting products got cancelled, costs are rising, and there isn’t a strong AI-driven reason yet for people to upgrade. This combination of factors is why Jefferies turned bearish on the stock.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Stock ratings, price targets, and estimates mentioned are those of Jefferies and are subject to change. The historical performance of US stocks is not a guarantee of future returns, and gains should not be viewed as an offer or solicitation to buy. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor. Financial Express is not responsible for any decisions made based on this information.