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Apple (AAPL) just reported record quarterly revenue and profit, helped by very strong demand for its latest iPhone lineup and solid growth in China and India, plus a constructive outlook for the next quarter.
See our latest analysis for Apple.
The earnings beat and upbeat guidance helped reset sentiment around Apple, with the 1-day share price return of 4.04% and 7-day share price return of 5.69% suggesting momentum has picked up. The 1-year total shareholder return of 18.93% points to solid longer term gains.
If this kind of Big Tech move has your attention, it could be a useful moment to scan other potential opportunities across high growth tech and AI stocks.
With Apple stock up after a record quarter, a 1-year total return near 19% and the share price only about 8% below the average analyst target, the key question now is simple: is there still an entry point here, or is future growth already priced in?
The leading narrative pegs Apple’s fair value at $182.85, well below the last close at $269.96, which sets up a clear valuation tension for investors to consider.
This narrative is primarily based on Ben Thompson’s (Stratechery) view that Apple has transitioned from being a product-driven company to a services-oriented one. While the iPhone remains central to Apple’s business, hardware differentiation has plateaued. Instead, Apple’s strategy has shifted towards expanding its ecosystem through services like Apple Intelligence, which requires a large install base rather than hardware upgrades. Apple’s future growth hinges on its ability to leverage software and services across its hardware user base. Software is not an area that Apple has been historically strong, and they are already behind with AI versus Google and Meta. Apple Services (US$18bn) is catching up with Product (US$22bn) on a quarterly basis, and this is in the low season. Apple Services’ margin of 74% means the segment is as profitable as Products at 35%. Catalysts (or lack of):
The narrative leans heavily on a services-heavy future, richer margins and a mature valuation multiple. It raises the question of which growth mix and profitability path support that $182.85 number and the implied premium versus today’s price.
Result: Fair Value of $182.85 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, there is still a chance that stronger than expected hardware cycles or faster AI progress could support higher earnings and challenge this view that the stock is overvalued.
Find out about the key risks to this Apple narrative.
If you do not share this view or prefer to work from your own numbers, you can create a custom Apple thesis in just a few minutes by starting with Do it your way.
A great starting point for your Apple research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
If Apple is already in your sights, do not stop there. Use the screener to surface fresh ideas that match your style before the market moves on.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AAPL.
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