Is It Time To Reduce Exposure To Apple Stock?

Our multi-factor evaluation indicates that it might be time to lessen exposure to AAPL stock. While Apple’s operating performance and financial health remain strong, the current valuation leaves little margin for error. At these levels, AAPL stock looks relatively expensive, suggesting risk is more skewed toward multiple compression than fundamental deterioration. Separately, see: Risks That Palantir Stock Investors Must Know. Additionally, check out Amazon Stock In 2026: Show Me The Growth.

NEW YORK, NEW YORK – SEPTEMBER 20: Apple AirPods are seen on display at the Fifth Avenue Apple Store on new products launch day on September 20, 2024 in New York City. Apple CEO Tim Cook was in attendance at the opening of the Fifth Avenue Apple store for the release of the new iPhone 16 lineup, Apple Watch Series 10, the new black titanium Apple Watch Ultra 2, AirPods 4, and new colors for AirPods Max. (Photo by Michael M. Santiago/Getty Images)

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Below is our Apple evaluation:

Summary

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Let’s delve into details of each of the assessed factors but prior to that, for quick background: With $4.1 Tril in market capitalization, Apple offers innovative smartphones, computers, tablets, wearables, accessories, and digital services comprising gaming, music, payments, and financial solutions for consumers and various business sectors.

[1] Valuation Looks Very High

Valuation

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This table highlights how AAPL is valued compared to the broader market. For additional information, see: AAPL Valuation Ratios.

[2] Growth Is Moderate

• Apple has experienced an average top line growth rate of 1.8% over the last 3 years
• Its revenues have increased by 6.0% from $386 Bil to $409 Bil in the past 12 months
• Furthermore, its quarterly revenues rose by 9.6% to $94 Bil in the most recent quarter from $86 Bil a year ago.

Growth

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This table highlights how AAPL is growing compared to the broader market. For further details, see: AAPL Revenue Comparison

[3] Profitability Appears Very Strong

• AAPL last 12 month operating income was $130 Bil representing operating margin of 31.9%
• With cash flow margin of 26.6%, it generated nearly $109 Bil in operating cash flow over this period
• For the same time frame, AAPL generated nearly $99 Bil in net income, indicating a net margin of approximately 24.3%

Margins

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This table highlights AAPL’s profitability compared to the broader market. For more details, see: AAPL Operating Income Comparison

[4] Financial Stability Looks Very Strong

• AAPL Debt was $102 Bil at the conclusion of the most recent quarter, while its current Market Cap is $4.1 Tril. This signifies a Debt-to-Equity Ratio of 2.5%
• AAPL Cash (including cash equivalents) constitutes $55 Bil of $331 Bil in total Assets. This results in a Cash-to-Assets Ratio of 16.7%

Financial Stability

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[5] Downturn Resilience Is Strong

AAPL has demonstrated stronger resilience than the S&P 500 index during several economic downturns. We evaluate this using both (a) the extent of the stock’s decline and, (b) the speed of its recovery.

2022 Inflation Shock

• AAPL stock decreased by 31.3% from a peak of $182.01 on 3 January 2022 to $125.02 on 5 January 2023 compared to a peak-to-trough drop of 25.4% for the S&P 500.
• Nevertheless, the stock completely recovered to its pre-Crisis high by 12 June 2023
• Since that time, the stock has risen to a peak of $286.19 on 2 December 2025, and is currently trading at $271.86

2020 Covid Pandemic

• AAPL stock decreased by 31.4% from a peak of $81.80 on 12 February 2020 to $56.09 on 23 March 2020 versus a peak-to-trough decline of 33.9% for the S&P 500.
• Nonetheless, the stock completely recovered to its pre-Crisis peak by 5 June 2020

2008 Global Financial Crisis

• AAPL stock retreated by 60.9% from a high of $7.14 on 28 December 2007 to $2.79 on 20 January 2009 compared to a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 October 2009

However, the risk is not restricted to major market crashes. Stocks can decline even with strong market conditions—consider situations such as earnings reports, business updates, or outlook changes. Check AAPL Dip Buyer Analyses to review how the stock has bounced back from significant drops in the past.

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