Apple (NASDAQ:AAPL) has been on a tear lately. Apple stock has bounced back to not only the $200 per share mark, but onward to new all-time highs. As you likely already know, this latest wave of bullishness for the tech giant’s shares has all to do with its plans to capitalize on the generative artificial intelligence growth trend.

Yet while this current frenzy of “AI mania” may not screech to a halt immediately, in time a key issue that has fallen onto the back burner could resume being a top-of-mind issue. We’re talking, of course, about demand headwinds for the company’s flagship iPhone product.

If concerns re-emerge that AI will fail to serve as a “silver bullet” for iPhone sales, AAPL may be at risk of reversal. With this, you may want to keep the following in mind, if you’re mulling whether to buy, sell, or hold.

Apple Stock, its AI Rally, and Correction Risk

It’s been nearly a month since Apple had its big AI unveiling, at the company’s 2024 World Wide Developers Conference, held in early June. At the event, the tech giant presented its plans to integrate its “Apple Intelligence” gen AI platform into its various apps, products, and operating systems.

Apple also announced that OpenAI’s ChatGPT will become available on Apple platforms later this year. Investors were already bidding up Apple stock before the event, but since the event, a “buy on the rumor, buy more on the news” scenario has taken shape.

As mentioned above, AAPL climbed back above the $200 per share mark thanks to the WWDC catalyst. In the weeks since, shares have kept hitting new high water marks.

Still, don’t jump to the conclusion that this stock has become unsinkable. There is big potential for AI to transform Apple’s business, much like it has for other “Magnificent Seven” components.

However, it’s not as if the key issue that sank AAPL between January and April has completely gone away. In the coming months, a refocusing of attention on the negatives with Apple could bring the “AI rally” to an end. From there, a correction may occur.

Why FUD Could Soon Make a Return

The WWDC AI event may have given the market a new reason to be bullish about Apple stock, but the aforementioned iPhone demand problem still lurks beneath the surface. As UBS analyst David Vogt recently pointed out, sales and market share declines, especially in China, have persisted.

Worse yet, per Vogt’s calculations, not only is the iPhone becoming less popular in higher-growth markets like China and India. The latest declines indicate that the iPhone is losing market share stateside as well.

Sure, one can argue that this problem could completely go away, once gen AI and ChatGPT integration gins up a new round of demand for the iPhone.

However, it’s far from certain whether this will occur. After all, one of Apple’s major competitors in the global smartphone market already beat it to the punch, launching an AI-compatible phone earlier this year.

As we pointed out in a previous article on Apple, AI may fail to solve the company’s demand problems in China.

Why? While not certain, it’s possible that the U.S. Federal Government’s crackdown on AI software exports to China extends to Apple’s upcoming mobile AI offerings as well.

Only time will tell, but if in the coming quarters, Apple sees underwhelming improvement in iPhone sales due to its AI rollout, fear, uncertainty and doubt about future growth could again rear its ugly head.

The Verdict: Sell Now, Take Another Bite Later

Don’t get us wrong. It’s not as if AAPL is going to make a tumble back to $150, $125, or even less per share. However, a moderate decline may be possible, if the initial results from Apple’s AI endeavors fail to live up to the hype.

For instance, if this plays out, AAPL could slide back down toward its 52-week low of $164.08 per share. Hence, as the stock sits comfortably above $220 per share, now is an opportune time to take profit.

From there, you can sit back on the sidelines, keeping an eye on the AI situation with Apple as it continues to unfold. If the situation calls for it, go for another “bite of the AAPL,” by re-entering an Apple stock position at a more favorable price.

Apple stock earns a C rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.