Deep Dive<\/span><\/h2>\nDown over 7% so far this year, Apple<\/a> is the second-worst-performing Magnificent 7 component of 2025, trailing only Tesla<\/a>. Despite this, Apple is one of just three firms with a market cap of $3 trillion or more, sitting behind Nvidia<\/a> and Microsoft<\/a>.<\/span><\/p>\nHowever, Apple has found some momentum lately, rallying more than 12% over the past three months. Is this a sign that Apple is back \u2014 or just a bounce after a flailing start to the year?<\/span><\/p>\nDigging Into the Business<\/b><\/h4>\n
We know Apple as the iPhone maker \u2014 and the company behind Macs, AirPods, iPads, and more. Thanks to its massive success, which really dates back to the iPod and Apple Music (remember that?), Apple has built a fortress balance sheet and generates immense cash flow.<\/span><\/p>\nOne problem though? Growth.<\/span><\/p>\n![\"Apple's](\"https:\/\/www.etoro.com\/wp-content\/uploads\/2025\/08\/AAPL-1-1024x726.png\")
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While Apple has enjoyed strong growth over the years, revenue and profit growth have struggled over the last several years. That has forced some investors to look for growth in other areas \u2014 for instance, with stocks like Amazon<\/a> and Nvidia \u2014 even if that means accepting more volatility.<\/span><\/p>\nRisks and Opportunities<\/b><\/h4>\n
When we look at the valuation, Apple trades at just under 30x forward earnings. This is more expensive than the overall market, but bulls argue that Apple still deserves a premium. As for whether it\u2019s expensive or cheap based on its own historical range, Apple stock sits somewhere in between. Over the last five years, shares have typically been considered \u201ccheap\u201d at around 22x to 25x earnings and \u201cexpensive\u201d above 32x.<\/span><\/p>\nInvestors are now turning their attention to Apple\u2019s products, with an iPhone refresh due in the coming months and a growing focus on AI.<\/span><\/p>\nAI advancements were expected to elevate the user experience, but delays have left both investors and customers wondering whether Apple can deliver. Investors can still expect a steady stream of upgrades over the years \u2014 including new iPhones, iPads, Macs, and more \u2014 but it\u2019s the AI component they\u2019re most eager to see take shape.<\/span><\/p>\nThe company is reportedly working on \u201can ambitious slate of new devices, including robots, a lifelike version of Siri, a smart speaker with a display, and home-security cameras,\u201d <\/span>according<\/span><\/a> to Bloomberg.<\/span><\/p>\nOf course, there are risks to this approach \u2014 including delays, products that fail to launch, or disappointing customer reactions. Investors will have to weigh Apple\u2019s historically strong business against their expectations for future revenue and profit growth.<\/span><\/p>\nWant to receive these insights straight to your inbox?<\/strong><\/p>\nSign up here<\/a><\/p>\n <\/p>\n
Digging Deeper \u2014 Apple\u2019s Services Business<\/span><\/h2>\n![\"\"](\"https:\/\/www.etoro.com\/wp-content\/uploads\/2025\/08\/AAPL2-1024x726.png\")
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Apple\u2019s hardware business may be searching for new growth outlets, but its Services business \u2014 which includes the App Store, Apple Music, iCloud, Apple Pay, and more \u2014 continues to hum along nicely.<\/span><\/p>\nRevenue continues to grow at a solid pace, while gross profits \u2014 which command 75% gross margins and are more than double the margins achieved with its Products business \u2014 also continue to grow. So even though it\u2019s a much smaller revenue footprint, this segment makes up more than 40% of gross profit and continues to grow at a steady clip.<\/span><\/p>\nThis is one reason (of several) why Apple has been able to remain so committed to its massive share repurchase plan, which elevates its earnings per share \u2014 (despite slow profit growth, a shrinking share count allows <\/span>earnings per share<\/span><\/i> to increase).<\/span><\/p>\nWhat Wall Street’s Watching<\/h2>\n
TGT<\/b><\/a><\/p>\nShares of Target are under pressure this morning, down almost 10% after the retailer reported earnings. The company beat on earnings and revenue estimates, but sales remain under pressure. Further, CEO Brian Cornell announced he is stepping down and being replaced by COO Michael Fiddelke. <\/span>Target stock pays a dividend yield north of 4.3%<\/span><\/a>.\u00a0<\/span><\/p>\n
However, Apple has found some momentum lately, rallying more than 12% over the past three months. Is this a sign that Apple is back \u2014 or just a bounce after a flailing start to the year?<\/span><\/p>\n We know Apple as the iPhone maker \u2014 and the company behind Macs, AirPods, iPads, and more. Thanks to its massive success, which really dates back to the iPod and Apple Music (remember that?), Apple has built a fortress balance sheet and generates immense cash flow.<\/span><\/p>\n One problem though? Growth.<\/span><\/p>\n While Apple has enjoyed strong growth over the years, revenue and profit growth have struggled over the last several years. That has forced some investors to look for growth in other areas \u2014 for instance, with stocks like Amazon<\/a> and Nvidia \u2014 even if that means accepting more volatility.<\/span><\/p>\n When we look at the valuation, Apple trades at just under 30x forward earnings. This is more expensive than the overall market, but bulls argue that Apple still deserves a premium. As for whether it\u2019s expensive or cheap based on its own historical range, Apple stock sits somewhere in between. Over the last five years, shares have typically been considered \u201ccheap\u201d at around 22x to 25x earnings and \u201cexpensive\u201d above 32x.<\/span><\/p>\n Investors are now turning their attention to Apple\u2019s products, with an iPhone refresh due in the coming months and a growing focus on AI.<\/span><\/p>\n AI advancements were expected to elevate the user experience, but delays have left both investors and customers wondering whether Apple can deliver. Investors can still expect a steady stream of upgrades over the years \u2014 including new iPhones, iPads, Macs, and more \u2014 but it\u2019s the AI component they\u2019re most eager to see take shape.<\/span><\/p>\n The company is reportedly working on \u201can ambitious slate of new devices, including robots, a lifelike version of Siri, a smart speaker with a display, and home-security cameras,\u201d <\/span>according<\/span><\/a> to Bloomberg.<\/span><\/p>\n Of course, there are risks to this approach \u2014 including delays, products that fail to launch, or disappointing customer reactions. Investors will have to weigh Apple\u2019s historically strong business against their expectations for future revenue and profit growth.<\/span><\/p>\n Want to receive these insights straight to your inbox?<\/strong><\/p>\n Sign up here<\/a><\/p>\n <\/p>\n Apple\u2019s hardware business may be searching for new growth outlets, but its Services business \u2014 which includes the App Store, Apple Music, iCloud, Apple Pay, and more \u2014 continues to hum along nicely.<\/span><\/p>\n Revenue continues to grow at a solid pace, while gross profits \u2014 which command 75% gross margins and are more than double the margins achieved with its Products business \u2014 also continue to grow. So even though it\u2019s a much smaller revenue footprint, this segment makes up more than 40% of gross profit and continues to grow at a steady clip.<\/span><\/p>\n This is one reason (of several) why Apple has been able to remain so committed to its massive share repurchase plan, which elevates its earnings per share \u2014 (despite slow profit growth, a shrinking share count allows <\/span>earnings per share<\/span><\/i> to increase).<\/span><\/p>\n TGT<\/b><\/a><\/p>\n Shares of Target are under pressure this morning, down almost 10% after the retailer reported earnings. The company beat on earnings and revenue estimates, but sales remain under pressure. Further, CEO Brian Cornell announced he is stepping down and being replaced by COO Michael Fiddelke. <\/span>Target stock pays a dividend yield north of 4.3%<\/span><\/a>.\u00a0<\/span><\/p>\nDigging Into the Business<\/b><\/h4>\n
<\/p>\nRisks and Opportunities<\/b><\/h4>\n
Digging Deeper \u2014 Apple\u2019s Services Business<\/span><\/h2>\n
<\/p>\nWhat Wall Street’s Watching<\/h2>\n