Does Apple’s New N1 Chip Shift Its 2025 Valuation Outlook?

Thinking about what to do with your Apple shares or considering jumping in? You are far from alone. After all, Apple has been at the center of the tech world for years, and the stock has given investors plenty to talk about recently. Over the past week, it dropped 5.4%, and if you zoom out, it is down 1.2% for the past month and 7.0% since the start of the year. But here is the thing: look back further and you will see a more encouraging picture, with a 2.3% gain over the past year, 51.2% in three years, and an eye-popping 111.3% over five years.

Those kinds of moves always prompt a tough question: is Apple undervalued, fair, or getting a bit ahead of itself? The story is not just about prices, though. Apple is making bold moves, like developing its own N1 wireless chip to kick Broadcom out of the iPhone, and nudging flagship prices higher, especially with the new 2-terabyte iPhone option. Shifts like these suggest Apple is trying hard to control its tech future and carve out new sources of revenue at the same time. Political headlines have also been swirling around Apple, with the tech giant at the table for major policy conversations and in the crosshairs of antitrust talk. It all adds up to heightened risk, but also new opportunities for future growth.

If you are focused on valuation, Apple currently gets a score of 3 out of 6 on our value checklist, showing it could have room to improve but is not an obvious bargain. Up next, let us dive deeper into the specific ways analysts gauge value, and why some approaches work better than others. Stick with us, because we have an even more powerful way to look at Apple’s worth coming up at the end.

Why Apple is lagging behind its peers

Approach 1: Apple Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a popular way to estimate a company's intrinsic value by projecting its future cash flows and then discounting them back to today’s dollars. Essentially, it tries to answer the question, "What is Apple worth right now, based on the cash it will generate in the future?"

For Apple, the current Free Cash Flow stands at about $97 billion. Analysts provide detailed estimates for the next few years, with projections reaching $179 billion in annual Free Cash Flow by 2029. After the analyst forecast period, the model extends these numbers further based on reasonable growth assumptions. These projections are all calculated and reported in US dollars.

This DCF model estimates Apple's fair value at $250.73 per share, which is about 9.5% higher than its recent price. That means Apple looks just a bit undervalued right now, but not by a dramatic margin. The DCF approach suggests that while Apple is trading below its calculated intrinsic value, the difference is small enough that the stock could be considered close to fair value at current prices.

Result: ABOUT RIGHT

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

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Apple's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Apple Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a go-to valuation tool for profitable companies like Apple, since it directly connects the stock price to the company’s actual earnings. It is a clear yardstick for how much investors are willing to pay for each dollar of profit Apple generates.

The right PE ratio for any stock depends on expectations for future growth and the risks involved in achieving it. High-growth companies typically deserve a higher PE because investors anticipate rising profits, while riskier or slower-growing businesses should trade at lower multiples.

At the moment, Apple trades at a PE ratio of 33.9x. That is right in line with its US tech peers, whose average sits at 34.9x, but significantly above the broader tech industry average of 24.3x. To get a clearer perspective, Simply Wall St uses its Fair Ratio metric, which combines factors like profit margins, growth potential, market cap, industry context, and company-specific risks to calculate what would be a reasonable PE ratio for Apple. For Apple, that Fair Ratio stands at 38.7x.

Relying on this Fair Ratio is more insightful than just comparing to peers or the broader industry. It considers Apple’s unique mix of strengths and challenges, such as its dominant brand, scale, and forecast growth. When you compare Apple’s actual PE of 33.9x to the Fair Ratio of 38.7x, there is only a modest gap, suggesting the stock is trading pretty close to a reasonable value for its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 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 better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply your story about a company, a way to connect what you believe about Apple’s future with numbers like estimated revenue, profit margins, and fair value. It lets you go beyond raw data or simple ratios by linking Apple’s strategy, risks, and opportunities directly to your financial forecast and what you see as a fair price for the stock.

Narratives make investing more accessible and dynamic, because anyone can create and share them on Simply Wall St’s Community page, a popular hub used by millions of investors. Using Narratives, you can clearly compare Apple’s current price to the fair value you assign based on your story, and see at a glance if you should buy, sell, or hold. What makes Narratives extra powerful is they update as soon as important news, earnings, or trends emerge, ensuring your view stays relevant as the facts change. For example, some investors see Apple’s innovation and resilience justifying a fair value as high as $300 per share, while others believe slow growth and risks mean it is only worth $177. The Narrative you choose determines your outlook and actions.

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

🐂 Apple Bull Case

Fair Value: $275.00

Undervalued by: 17.5%

Revenue Growth Rate: 12.78%

• Apple is overcoming a nearly 35% stock decline triggered by steep US tariffs through strategic supply chain shifts and a push into India and Vietnam, which helps shield its profit margins.
• Despite external headwinds, Apple delivered strong profits in Q1 2025 and set a new record for services revenue. Analysts maintain a "Moderate Buy" with price targets above current market levels.
• Strategic investments in artificial intelligence and a loyal customer base are considered key drivers for long-term growth, supporting Apple’s resilience in the face of geopolitical and regulatory challenges.

🐻 Apple Bear Case

Fair Value: $207.71

Overvalued by: 9.2%

Revenue Growth Rate: 6.39%

• Increasing regulatory hurdles in the EU and weak emerging market strategies could erode Apple's profit margins and limit sales expansion, especially in price-sensitive regions like India.
• Dependence on a substantial Google search deal and changing USB-C regulations threaten services revenue and introduce significant risk to its growth outlook.
• Investment in high-cost new technologies, such as mixed reality and AI features, faces uncertain consumer adoption and could impact both financial performance and brand reputation.

Do you think there's more to the story for Apple? Create your own Narrative to let the Community know!

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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