Apple Stock Downgraded By Needham, Valuation Called ‘Expensive’ Compared to Google, Amazon

According to Needham, for Apple’s shares to move meaningfully higher, the company needs a new iPhone upgrade cycle–something that the brokerage does not expect in the next 12 months.

Apple (AAPL) shares slipped as much as 1% in pre-market trade on Wednesday after Needham downgraded the stock to ‘Hold’ from ‘Buy’ without a price target. 

In its note to clients, cited by TheFly, Needham cautioned investors on Apple, stating that the stock appears expensive and lacks a clear near-term catalyst. 

It noted that Apple’s revenue and margin growth are lagging behind those of other large-cap tech peers, suggesting that Alphabet (GOOG/GOOGL) and Amazon (AMZN) stocks may be more attractive alternatives. 

It added that Apple’s 15% to 30% cut from its platform is increasingly under pressure from rivals, while advances in generative AI could lead to new hardware that threatens iPhone demand.

The European Union’s Digital Market Act (DMA) already targets Apple’s control over app distribution and payment processing by stating that the company must allow third-party app stores and alternative payment systems on iOS.

However, Apple is legally challenging some of those requirements, arguing that they are costly and compromise user privacy and security. 

In the U.S., Apple is also facing legal pressure over its App Store practices. In April 2025, a U.S. court ruled that Apple had violated a 2021 injunction by imposing a 27% fee on external payments and discouraging users from leaving the App Store. The court barred Apple from charging such commissions or blocking links to alternative payment methods. Apple said it would comply while appealing.

Needham cited that Apple’s stock is currently trading at more than 26 times its projected 2026 earnings. For Apple’s shares to move meaningfully higher, the company needs a new iPhone upgrade cycle–something that the brokerage does not expect in the next 12 months. 

It added that if Apple were to aggressively expand its advertising business, it could significantly boost both sales and profit growth.

Needham pegs that a more favorable entry point for the stock would be in the $170 to $180 range. 

Apple’s stock has fallen more than 18% this year but gained over 5% in the last 12 months. In comparison, Alphabet's stock has fallen by more than 12% this year, and Amazon's stock has dipped by 7%. 

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