Thierry from arvy
CFA, Co-Founder & CIO of arvy, Quality Investing
Apple is trapped by the memory shortage, which forces it to either raise prices by double digits and test customer loyalty or absorb the cost and shrink its margins. Either path undercuts the growth, premium margins and pricing power priced into a near-record valuation of about 10x sales and over 30x earnings. The iPhone 18 launch in September is the real test: if Apple can push a couple hundred dollars through without denting demand, its moat is real. A wonderful business faces a hard year. x.com
Apple's roughly 40 times trailing and 37 times forward earnings make the shares too expensive ahead of next week's results. A short looks reasonable, though a sell-the-news reaction after earnings remains uncertain. x.com x.com
Apple's growth valuation gives too much credit to a $2,000 folding iPhone and a touchscreen MacBook. Its 36.16 forward P/E and 3.54 PEG are higher than recent readings over the past two years, making this a point to take serious profits. x.com
Apple's balance sheet and lack of spend keep a bid under its stock whether the market rises or falls. That bid gets stronger with foldable phones that break. x.com
Apple's weak Mac and iPhone demand and soaring costs threaten worse Q3 results and Q4 guidance than its weak Q2. IDC estimates Mac sales fell 11% y/y in Q3 after rising 13% in Q2. Counterpoint says Pro sales rose just 3% in the first three weeks while overall iPhone sales fell; lower-end models are absent this year. Foldable yields are reportedly 60%, and $100 price hikes may not offset costs. At $5 trillion, 39 P/E and 11 times sales, Apple's crowded 'safe haven' looks vulnerable. x.com
Apple's roughly 35x forward earnings premium looks unsustainable. If fear around the AI trade fades, its gains could stall or reverse. x.com x.com
Apple has the most predictable cash flows, including future cash flows, and that dependability appears to be what investors reward. Its P/E is about 40 versus 27 for Nvidia, 22 for Meta and 16 for Alphabet; Meta's free cash flow has turned negative. Leveraged build-out companies have been hit hardest while Apple has outperformed, but Apple investors could be wrong and the point at which its premium becomes too high remains open. x.com x.com x.com
Apple's valuation pays too hefty a premium for its expected long-term earnings growth. Its forward P/E-to-growth ratio is 2.58; even if the market sees its hardware moat and ability to exploit others' AI investments despite underinvesting itself as a winning strategy, that premium is too high. x.com
Apple's valuation no longer fits its growth, making the risk-reward unattractive despite an unmatched brand and business quality. Its forward P/E of about 35x is well above its long-term average and near its highest in years, while growth is forecast at mid-single digits, around 7% a year. After a 54% gain over the past year, Apple would be hit hard in a correction. A more reasonable valuation or a growth surprise would make it attractive again. x.com x.com
Apple is emerging as Big Tech's safe haven because it is immune to the AI infrastructure spending that has hyperscalers burning cash. Its 10.1x EV/sales valuation is elevated versus history but arguably justified by renewed growth and that immunity. A multi-model signal is very bullish, with all four models risk-on. The one technical wrinkle: a full selloff extension could target $292, so tomorrow's product event risks a sell-the-news replay of February–March. x.com
Apple's reliance on the iPhone makes its premium valuation look excessive. The phone supplies 50% of sales, while Apple's roughly $5 trillion market cap comes with a $347.73 share price, about 28% above the attached breakdown's $271.14 fair-value estimate. x.com