Is Now the Right Moment for Apple Stock as AI Momentum Lifts Shares 13.8% in 2025?

• Wondering if Apple stock is still a smart buy, or if the price tag has outpaced its true value? You're not alone. Many investors are asking the same as headlines buzz and the market keeps moving.
• Apple's stock has climbed by 2.2% over the past week and is up an impressive 13.8% year-to-date, stoking optimism about its growth potential and shifting how some view its risk profile.
• In the broader tech landscape, news around product innovations and regulatory developments continues to shape sentiment. Notably, attention has focused on Apple's recent moves into AI and hardware upgrades, which may have contributed to the latest rally.
• When we break down Apple's valuation using six key checks, it only scores a 1 out of 6 for being undervalued. As we dig into various valuation methods in the sections ahead, keep an eye out for an even smarter way to cut through the noise. This could help you see Apple's value in a whole new light.

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

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. This approach helps investors determine what the business may truly be worth based on its expected cash generation.

For Apple, the DCF model starts with its most recent Free Cash Flow of $99.89 billion and forecasts growth over upcoming years. Analyst estimates are available for the first five years, after which further projections are generated based on broader assumptions. By 2030, Apple's Free Cash Flow is projected to reach $186.84 billion, highlighting expectations for robust expansion even beyond current analyst coverage.

Using all these cash flows, the model arrives at an estimated intrinsic value per share of $223.98. Compared to the current share price, this suggests Apple stock is about 23.9% above its fair value according to the DCF. In other words, the stock is considered overvalued based on this approach.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Apple may be overvalued by 23.9%. Discover 927 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 (PE Ratio)

The Price-to-Earnings (PE) ratio is often the go-to metric for valuing profitable, mature companies because it connects a company's share price directly to its earnings power. A higher PE indicates higher growth expectations or lower risk, while a lower PE can suggest the opposite. However, context such as industry averages and company performance is key.

For Apple, the current PE ratio stands at 36.6x. This is noticeably above the Tech industry average of 22.4x and higher than the average PE of its peer group, which sits at 34.0x. Before drawing conclusions, it is important to consider Apple’s standout profitability, brand strength, and growth potential. These factors may warrant a premium compared to both industry and peers.

This is where the Simply Wall St "Fair Ratio" comes in. The Fair Ratio, calculated at 44.0x for Apple, estimates what a reasonable PE should be after considering the company’s growth outlook, profit margins, size, risks, and the broader industry. Unlike basic comparisons, this proprietary metric captures more of the nuance that makes Apple unique among its competitors. It is a more complete way to judge whether the stock price matches the fundamentals.

With Apple’s PE at 36.6x and its Fair Ratio at 44.0x, the difference is moderate. This suggests Apple’s price relative to its earnings is actually about right at current levels, especially given how its growth and financial quality compare with other tech giants.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 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's introduce you to Narratives. A Narrative is simply your story of a company, where you think it’s headed and why, laid out alongside clear assumptions about revenue, profit margins, and fair value.

Narratives are powerful because they connect the company’s big-picture story to concrete financial forecasts and an explicit fair value, making your investment reasoning transparent and easy to revisit. On Simply Wall St’s Community page, millions of investors use Narratives to share their perspectives, compare them with others, and adjust their outlooks as news or results come in. This dynamic process helps remove emotion from your buy or sell decisions.

Whenever new developments affect Apple, these Narratives automatically update the forecasts and fair value, so you always have a current view. For example, one Narrative might forecast a fair value for Apple around $281 if you see strong growth and ecosystem expansion, while another more cautious Narrative puts it closer to $177 based on tariff risks and margin pressures.

By exploring Narratives, you can confidently see which story and number best fit your beliefs and decide if now is the right moment to invest in Apple.

For Apple, here are previews of two leading Apple Narratives:

🐂 Apple Bull Case

Fair Value: $281.07

Currently trading at 1.4% below this fair value.

Projected revenue growth: 7.02%

• Expansion in emerging markets and a growing services ecosystem are boosting global reach and supporting higher, more stable margins.
• AI-powered features and ongoing investment in wearables are driving new revenue streams, product differentiation, and improved cost management.
• Risks include regulatory pressures, supply chain challenges, and the need for continued innovation to maintain premium valuation and brand advantage.

🐻 Apple Bear Case

Fair Value: $177.34

Currently trading at 56.6% above this fair value.

Projected revenue growth: 14.68%

• Apple’s price-to-earnings ratio is considerably higher than the market average, which appears unsustainable given slowing growth and maturing product lines.
• Margins are under pressure due to rising costs and supply chain risks, while heavy reliance on China and increased competition threaten future profitability.
• Despite strong cash reserves, a cautious approach to reinvestment and market optimism may be leaving the stock vulnerable to correction.

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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