The Future of Apple: Is the Tech Giant Overvalued?

Apple, currently the world's largest company by market capitalization, is under close scrutiny. Despite its high profile and undeniable market presence, some analysts suspect that Apple's stock price may be overvalued. Over the past two years, Apple has not been able to significantly increase its revenues. Without the robust growth of its subscription services, sales figures might have even declined. The third quarter of fiscal year 2024 offered a slight year-over-year increase of 5%, but this was unimpressive compared to the growth rates of other technology giants. Particularly noteworthy are the stagnant sales figures for iPads and iPhones. Despite the introduction of new iPhone models in recent years (iPhone 13 and 14), revenues remained at a similar level to those seen in 2021 and 2022. The sale of the new iPhone 16, which is equipped with generative AI technology called Apple Intelligence, could potentially bring new momentum. But how realistic is this? Apple's stock price is currently trading at 33.6 times earnings, a valuation significantly higher than the S&P 500's 22.6 times future earnings. Wall Street forecasts expect only modest growth of 2% by the end of this fiscal year and 13% next year. These numbers suggest that even the technological advancement with Apple Intelligence may not be sufficient to justify the high valuation. Compared to other technology companies, there may be more attractive alternatives for investors. Although Apple remains a solid company, investors should consider the possibility of investing their money elsewhere. Before purchasing Apple stock, investors should take into account that analysts from the Motley Fool Stock Advisor team currently do not count Apple among their top picks. These experts have previously made profitable recommendations such as Nvidia, whose investors have achieved significant returns.