Can Apple’s Recent AI Announcements Justify Its 10% Share Surge in 2025?

• Wondering if Apple stock could be the right pick for your portfolio, or if the current price tag is getting a bit ahead of itself?
• Apple shares have delivered impressive growth lately, climbing 10.2% in the past month and boasting a 20.1% return over the past year.
• Recently, Apple has made headlines with advancements in artificial intelligence and new product launches, adding momentum to investor enthusiasm. At the same time, shifts in global tech regulations have kept speculation swirling around the company's strategic moves.
• Apple currently scores 1 out of 6 on our valuation checklist, so a closer look at how we arrive at that number is essential. Read on to see why there might be a more insightful approach to valuation waiting at the end of this article.

Apple scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Apple Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and discounting them back to today's dollars. This approach gives a sense of what the business is worth based on its expected ability to generate cash.

For Apple, the model starts with its impressive trailing twelve month Free Cash Flow, which reached nearly $100 billion. Analysts have provided projections out to 2027, with Free Cash Flow forecast to climb steadily each year. For example, by 2026, estimates put FCF at $127.6 billion, and by 2027 at $138.0 billion.

Beyond the analyst horizon, additional growth is extrapolated using Simply Wall St's assumptions, with Apple's Free Cash Flow projected to reach $229.5 billion by 2035. All these cash flows are expressed in US dollars and reflect the company's strong track record and growth outlook in the tech industry.

When these future cash flows are discounted to present value, the DCF model arrives at an intrinsic value of $223.75 per share. However, this suggests Apple stock is currently priced about 22.0% above that estimate, indicating shares may be overvalued from this particular perspective.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Apple may be overvalued by 22.0%. Discover 885 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Apple.

Approach 2: Apple Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used to value profitable companies like Apple, as it directly relates a company's market value to its earnings power. For established businesses generating solid profits, the PE ratio provides a quick sense of how much investors are willing to pay for each dollar of earnings.

What counts as a “fair” PE ratio depends on how fast the company is expected to grow and what risks it faces. Higher growth prospects usually justify a higher PE, while added risk or an uncertain outlook tends to bring it down.

Currently, Apple trades on a PE of 36.0x. For context, the average PE for its tech industry peers is 33.97x, and the broader sector average is much lower at 22.87x. On the surface, Apple looks pricier than most of its direct competition.

However, Simply Wall St’s proprietary “Fair Ratio” goes beyond simple averages. It adjusts for Apple’s specific earnings growth, profit margins, industry dynamics, market cap, and risk factors to calculate what a fair PE for the company should actually be. This approach is more insightful than a basic peer or industry comparison because it reflects Apple’s unique strengths and challenges.

In Apple’s case, the Fair Ratio is 43.93x, significantly above both its current PE and the industry benchmarks. This suggests that, despite a somewhat premium price compared to peers, Apple trades below what would be justified given its business quality and prospects.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1405 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Apple Narrative

Earlier, we mentioned that there is an even smarter way to understand valuation, so let's introduce you to Narratives: an innovative approach where you connect your perspective on a company’s story to the numbers by shaping your own forecasts for future revenue, earnings, and fair value.

A Narrative helps you bridge the gap between qualitative insights and financial estimates. It turns your thesis about Apple’s business (such as optimism around AI or concerns over tariffs) into measurable forecasts, and then directly shows what that would mean for the company’s fair value and valuation.

You don’t need to be an expert to use Narratives. On Simply Wall St’s Community page (used by millions of investors), you can easily adjust your assumptions and see how they compare with others, or even collaborate on building your own market view.

Narratives make it easy to track when Apple might be a buy or sell, as they continuously update with new news or earnings. Your personal fair value always reflects the latest information.

For Apple, some investors are very bullish, projecting a fair value as high as $300, anticipating long-term AI growth and services expansion. Others see risks from tariffs or market saturation and estimate fair value closer to $177. Your Narrative empowers you to choose the story and the price that fits your conviction.

For Apple, we’ll make it really easy for you with previews of two leading Apple Narratives:

• 🐂 Apple Bull Case

  Fair Value: $275.00

  Current Price vs Fair Value: 0.7% undervalued

  Forecast Revenue Growth: 12.78%

  • Despite a nearly 35% stock decline due to steep US tariffs, Apple’s Q1 2025 profit beat expectations and services revenue reached a record $26.3 billion.
  • Analysts expect continued resilience, citing innovation in AI and successful brand loyalty, with price targets as high as $275 and a “Moderate Buy” consensus.
  • Apple is mitigating supply chain risks by expanding production beyond China, and long-term growth is projected even amid short-term geopolitical volatility.
• 🐻 Apple Bear Case

  Fair Value: $207.71

  Current Price vs Fair Value: 31.4% overvalued

  Forecast Revenue Growth: 6.39%

  • Overreliance on new and emerging markets could prove unfruitful due to prohibitive costs and sharp demographic differences, risking failure to grow substantially in regions like India.
  • Regulatory pressure from the EU and dependency on a major search deal with Google expose Apple’s Services revenues to disruption and margin erosion.
  • New bets like Apple Vision Pro and mixed reality tech face uncertain adoption and could have only a minor financial impact, while higher US manufacturing costs threaten profit margins.

Do you think there's more to the story for Apple? Head over to our Community to see what others are saying!

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.

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