Investing.com -- Citi has lowered its estimates for Apple’s (NASDAQ: AAPL ) iPhone sales, citing delays in a key Siri upgrade originally planned for April.

The bank now expects iPhone shipments of 232 million units in 2025 and 244 million in 2026, down from prior forecasts of 5% annual growth in both years.

Apple confirmed on March 7 that the anticipated update to Siri, featuring on-screen awareness, personal context, and deep app integration, will not arrive this year as planned. Instead, the company now expects to roll out the update in 2026.

Citi analysts led by Atif Malik see this as a setback, noting that an upgraded Siri “would have been a catalyst to drive up higher refresh this year.”

“Given the delays in the highly anticipated major Siri update, we believe Apple will miss the opportunity to drive up refreshment cycle this year,” they noted.

The analysts have also cut their Apple earnings per share (EPS) estimates for fiscal years 2025 through 2027 by about 1%. Their $275 price target on the stock remained unchanged.

While the delay is a near-term negative, Citi sees some positive developments for Apple’s AI initiatives.

The technology giant is making progress on launching Apple Intelligence in China, with partnerships confirmed with Alibaba (NYSE: BABA ) and Baidu (NASDAQ: BIDU ). Apple also plans to add support for simplified Chinese in April, a move Citi views as a step toward broader adoption.

Elsewhere, Apple’s services business is tracking in line with expectations. Sensor Tower data shows App Store sales rising 13% year-over-year in January and February, in line with Apple’s low double-digit guidance.

From a macro standpoint, tariffs remain a potential headwind. Citi estimates that if Apple fails to secure an exemption, duties on China-made products could shave 1.7% off its total gross margin, given that 90% of Apple’s manufacturing is based in China and 40% of sales come from the U.S.

Regulatory risks also persist, with Google’s ongoing antitrust case against the U.S. Department of Justice drawing investor attention.

Google (NASDAQ: GOOGL ) pays Apple a share of search revenue for default placement on its devices, a deal worth $20 billion in 2022. Citi notes that potential restrictions on such agreements could impact Apple’s high-margin services revenue.

On a more positive note, Citi sees defensive qualities in Apple’s stock. A rotation out of AI-exposed megacaps could offer some relative support as the company navigates near-term headwinds.