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Apple (AAPL) stock has dropped about 18% from its peak in December, losing over $700 billion in market value as investors closely examine the company's AI strategy and broader economic challenges. The stock hit an all-time high of $259 on December 26, following the integration of ChatGPT into iPhones and the second rollout of Apple Intelligence AI features, which boosted its market cap to $3.9 trillion.

However, Apple has struggled recently, with shares falling 11% last week, marking its biggest weekly loss since November 2022. As of Tuesday, Apple’s market cap stands around $3.2 trillion.

The tech giant has faced setbacks in 2025 as the broader tech market has been hit by investor concerns that the AI boom may not live up to expectations. Apple’s own AI strategy has shown signs of weakness. On March 7, the company delayed the release of an upgraded Siri, citing unexpected delays. This move led Morgan Stanley to lower its price target for the stock to $252 from $275 and reduce its iPhone sales forecasts for 2025 and 2026.

Morgan Stanley analysts also found that the upgraded Siri feature is the top AI enhancement prospective iPhone upgraders are interested in. Given the delay, the analysts now expect iPhone upgrade rates to be lower than previously anticipated, particularly in the fall, as they had expected Siri to be a key driver for upgrades alongside the iOS18.4 launch in April 2025.

Additionally, Apple's costs could rise due to Trump's tariffs on China, which could add an extra $2 billion to its expenses in the next year, according to a Morgan Stanley analysis. Further pressure comes from a potential revenue hit if the U.S. government succeeds in blocking Apple's lucrative deal with Google, which generates $18 to $20 billion annually by making Google the default search engine on Apple devices. The DOJ's ongoing scrutiny of tech companies also adds to Apple's regulatory challenges.

Paraphrasing text from "Yahoo!Finance"all rights reserved by the original author