Apple (AAPL) stock has been increasingly affected by a tough market and economy in 2025. The iPhone developer has struggled to find any kind of momentum throughout the year, aligning with much of its Magnificent 7 peers. AAPL fell below the $200 level in April after Trump’s Liberation Day, when he imposed tariffs on 185 countries. Additionally, it took nearly 60 days for the stock to return to this price range. However, one expert now believes that another dip could be coming for the iPhone developer.

Indeed, Apple stock was downgraded to Hold from Buy by Needham analysts who said the stock is overvalued amid growing AI competition. Needham Analyst Laura Martin explained in a note to clients Wednesday that Apple is currently trading at a more expensive multiple than it has historically. Further, the rise of generative AI threatens to disrupt the iPhone maker’s business, and could do harm if Apple continues to fall short in using AI as a revenue booster.

“We believe that, for this stock to work, it must have the catalyst of an iPhone replacement cycle, which we do not foresee in the next 12 months,” Martin wrote. “Until then, we believe that $170-$180/share is a better entry level.” She also said Apple could accelerate growth by deciding to “aggressively pursue an advertising revenue stream.”

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Further, the analyst noted that Apple (AAPL) also doesn’t reap the benefits of AI Cloud revenue like its competitors. “While peers like Microsoft (MSFT), Google (GOOG), and Meta (META) are launching foundational models and GenAI-native platforms, AAPL still lacks a competitive LLM [large language model] or a developer ecosystem around GenAI capabilities.”

For so long, Apple was the unequaled leader of market cap rankings. The iPhone developer was not only the first to reach a $2 trillion market value but also became the first to reach a $3 trillion mark. However, that dominance has waned in recent months. Now, Apple is currently the worst-performing stock of its “Magnificent Seven” Big Tech peers, down roughly 18% for the year. The company has faced lagging sales in China and a sluggish smartphone market. Other investment firms have also downgraded their stock forecasts for the iPhone developer, including Jefferies and Loop Capital. At press time, AAPL sits at $202, trading in the middle of its 52-week range and below its 200-day simple moving average.