Stock of the Week: Is Apple’s Reign at the Top Under Threat?
Is market confidence in Apple still justified?
Here is the 18th edition of “Stock of the Week”. You can find all the previous analyses and my articles on my main page (for an easier search, use a computer, mobile version is harder to navigate).
Here are the links to the 3 previous “Stocks of the Week” as well
This week, we are focusing on Apple. Despite its lofty valuation and slowing growth, Apple has managed to hold its ground. But with rising political risks (like Trump’s recent threats) can that resilience continue? Let’s take a closer look!
How do you view Apple’s current position? Share your perspective below
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The stock at a glance!
Recent news
President Trump’s criticism of Apple’s move to shift iPhone production to India highlights growing tariff tensions and his push for US-based manufacturing. He threatened to impose 25% tariffs
Despite mounting political pressure, Apple is doubling down on its India manufacturing strategy with no plans to scale back investments
Apple’s dependency on China for manufacturing (accounting for roughly 90% of iPhone current production) exposes it to geopolitical risks
Apple appears to be lagging in the AI race, with internal reports pointing to slow progress and ongoing struggles, particularly with Siri, whose limitations may undermine Apple’s long-term product strategy
While innovation and rising competition have loomed as threats for years, Apple has managed to maintain its dominance. However, concerns are growing as the company reportedly considers raising iPhone prices this fall, banking on new feature upgrades to justify the increase
For now, Apple’s services segment is the key driver of growth and margins, growing over 11% and accounting for 25% of total revenue
Last earnings report
Apple reported $95.4B in revenue for the quarter, marking a 5% YoY increase, while EPS rose 8%. By segment, iPhone revenue edged up 2%, and services revenue posted a strong 11% gain.
The company also unveiled plans for a $500B US investment over the next 4 years, which includes the construction of a new server factory in Texas. CEO Tim Cook highlighted the continued momentum in services and teased upcoming launches like the new iPhone and next-gen Macs and iPads powered by Apple Silicon. CFO Kevan Parekh underscored the solid EPS growth and commitment to shareholder returns, even as the company navigates tariff headwinds and ongoing challenges in AI development.
Analysts’ recommendations
May, 13. Daiwa. Buy. $270 —> $240
May, 12. China Renaissance. Buy. $248 —> $239
May, 5. CICC. Buy. $285 —> $260
May, 5. Phillip Securities. Hold. $235 —> $200
May, 2. Bank of America. Buy. $240 —> $235
May, 2. Monness Crespi $ Hardt. Buy. $260 —> $245
May, 2. Citigroup. Buy. $245 —> $240
May, 2. BNP. Hold. $180 —> $190
May, 2. TD Cowen. Buy. $290 —> $275
May, 2. DA Davidson. Buy. $290 —> $250
May, 2. Goldman Sachs. Buy. $256 —> $253
May, 2. Wedbush. Buy. $250 —> $270
May, 2. Baird. Buy. $260 —> $230
My analysis
Despite the current turbulence, Apple remains one of the most powerful (if not the most powerful) brands globally. Its enduring strength stems from a tightly integrated ecosystem and a brand universe that has been carefully cultivated over many years
The company’s robust growth in services revenue (characterized by high margins and recurring income) is a direct reflection of that ecosystem. This segment has become a crucial engine for both profitability and resilience
However, Apple faces a growing set of challenges: tariff risks, geopolitical tensions, intensifying competition, a perceived lag in AI innovation and questions around its pricing power. Many of these risks may not yet be fully reflected in the stock’s valuation
That said, Apple is far from defenseless. Its immense cash flow and industry-leading profitability give it significant firepower to invest in emerging technologies and adapt strategically
Given the current valuation and risk backdrop, a prudent long-term investor might prefer to wait for a more attractive entry point, one that offers a greater margin of safety
Technical analysis
I have defined three buying zones that I find interesting for long-term investments during pullbacks. While these zones may not be reached, I am prepared for a market (or stock) consolidation to seize long-term opportunities. For me, this approach offers a better risk/reward ratio.
Of course, this is just my opinion, and I am sharing it with you, but each investor should decide on their own investment style. With that said, here are my three buying zones for Apple.
Buying zone 1. $180
Buying zone 2. $165
Buying zone 3. $130
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Used source: Marketscreener.com. Affiliate link just here