Apple Defies Downgrade Bets with Record Revenue Growth

Apple's third-quarter results showed revenue growth of 16% year-over-year, its strongest June quarter ever. Despite this positive performance, Apple shares dipped 2% to $306.93 after Jefferies downgraded the stock to Underperform with a price target of $264 due to supply chain risks.

Gene Munster of Deepwater Asset Management countered the downgrade, arguing that shares are undervalued due to anticipated 15% iPhone price hikes and an AI-driven upgrade cycle starting in 2027. He noted that most consumers purchase iPhones through subscription models, which means higher upfront costs translate to only a marginal increase in monthly payments.

Munster emphasized that Apple will absorb some costs while passing others to consumers, which could help boost margins and offset weak street expectations. He also highlighted the potential for a sustained upgrade cycle driven by personalized AI features in devices, starting in 2027.