Analyst Explains Why Apple (AAPL) Will Struggle to Maintain Its Customer Base - 'They've Gone On The Defense'

We recently published Trending Analyst Calls: Top 10 Stocks. Apple Inc. (NASDAQ:AAPL) is one of the stocks analysts were recently talking about.

Laura Martin from Needham said in a program on CNBC earlier this month that Apple is losing its ability to raise prices and the company is “not innovating.” The analyst warned that it would become difficult for the company to maintain its installed user base.

“They’ve gone on to defense. If you don’t have innovation, you can’t raise price. And as the genius that just spoke said, they aren’t raising price. One model has a $100 increase. That’s bad because they’re including a lot of cool stuff. What we heard is 90 minutes of cool stuff they’re including for no price increase or sneaky price incluses on memory. That’s all bad. That’s because they’re not innovating. And by the way, their major competitor called Android is backed by Google Gemini’s LLM. So they’re going to be able to raise prices faster or if Google decides on Android not to raise prices, it’s going to have a better product in two or three years while Apple sits around and doesn’t innovate. So it will get ever more expensive for Apple to maintain its installed base of customers.”

Apple can only do so much in innovation to revolutionize its iPhone each year. A UBS survey shows that the iPhone upgrade cycle has reached 35 months in the US. A separate report from Consumer Intelligence Research Partners says about 63% of iPhone users keep their smartphones for more than two years. Apple is losing its pricing edge as it has to put a cap on its price tags to compete in key markets like China. Samsung, Xiaomi and other companies can launch advanced hardware and software features to compete with Apple and keep the company under pressure in Asia.

Renaissance Large Cap Growth Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its second quarter 2025 investor letter:

“Apple Inc. (NASDAQ:AAPL) declined in the quarter. Despite reporting solid operating results, the stock came under pressure over concerns about decelerating iPhone sales, China growth headwinds, and underwhelming details for Apple’s long-awaited AI strategy. Tariffs were also an unexpected negative surprise, with Apple quantifying a sizable $900M cost impact. Moreover, the latest development in the Apple vs. Epic Games lawsuit resulted in a ruling that Apple had violated an earlier injunction, questioning Apple’s absolute control over its App Store.”

While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.