Apple (AAPL – Free Report) shares are overvalued, as suggested by a Value Score of D. The AAPL stock is trading at a forward 12-month price/earnings (P/E) of 29.63X compared with the broader Zacks Computer & Technology sector’s 24.72X.

Apple shares are trading at a premium compared with peers, including HP (HPQ – Free Report) , Microsoft (MSFT – Free Report) and Amazon (AMZN – Free Report) . Shares of HP, Microsoft and Amazon are trading at a P/E multiple of 6.46, 22.25 and 26.33, respectively.

Apple Stock’s Valuation

Image Source: Zacks Investment Research

Is Apple worth buying at current prices? Let’s dig deep to find out.

Apple Shares Ride on Strong iPhone Sales, New MacBooks

Apple shares have appreciated 10.2% over the trailing six-month period, outperforming the Zacks Computer and Technology sector’s return of 2.3%. AAPL shares have outperformed HP, Microsoft and Amazon over the same time frame. Shares of Amazon, Microsoft and HP have dropped 8.1%, 21.4% and 33.5%, respectively.

AAPL Stock’s Performance

Image Source: Zacks Investment Research

Apple’s outperformance can be attributed to strong iPhone 17 sales. The company has been adding features to the iPhone line-up, including Apple Intelligence tools as well as Apple Creator Studio, which is driving iPhone sales. Since the launch of Apple Intelligence, the company has introduced dozens of features, including writing tools and cleanup and made it available in 15 languages. Visual intelligence is helping users learn and do more with their content on iPhone. It is helping users search faster, take action and answer questions across their apps. 

Apple’s multi-year collaboration deal with Google is now expected to be a key catalyst in boosting Apple Intelligence features. Under the agreement, the next generation of Apple’s foundation models will be based on Google’s Gemini models and cloud technology. Apple Intelligence features, including a more personalized Siri, will now be powered by Google models. However, Apple Intelligence will continue to run on Apple devices and Private Cloud Compute.

Apple is expanding its MacBook portfolio with the launch of MacBook Air and MacBook Pro. The devices come at an opportune time as the iPhone maker faces stiff competition from the likes of Lenovo, HP and Dell Technologies. Introduction of M5 Pro and M5 Max chips, built using a new Apple-designed Fusion Architecture, which connects two dies into a single SoC, boosts performance. The new MacBook Air is powered by the latest M5, which features a faster CPU and next-generation GPU with a Neural Accelerator in each core. The 14-inch and 16-inch MacBook Pro, powered by M5 Pro and M5 Max, adds superior performance and AI capabilities.

Apple’s Prospects to Ride on Strong Services Business

Services, which comprises Apple’s advertising business, AppleCare, Cloud Services, Digital content (Arcade, Music, Fitness+, TV, News+) and Payment services (Apple Card & Apple Pay), is riding on an expanding base of installed devices (over 2.5 billion). In the first quarter of fiscal 2026, Apple hit all-time revenue records on advertising, music, payment services and cloud services, where it saw double-digit growth on paid subscribers.

Apple’s Services segment benefits from an expanding games portfolio and the growing popularity of Apple TV+. Apple’s strategy of adding new games on a continuous basis is driving its user base. The Services have been benefiting from frequent updates, thereby driving the user base. New features helped Apple Pay make a significant impact by eliminating well over $1 billion in fraud, while generating more than $100 billion in incremental merchant sales globally. Apple Pay is now available in 89 markets, while Apple Fitness+ has expanded to 28 additional countries and regions. Apple Arcade expanded its catalog of highly rated games with more than 50 new titles.

AAPL’s Fiscal 2026 Earnings Estimate Revision Trend is Steady

The Zacks Consensus Estimate for Apple’s fiscal 2026 earnings has been steady at $8.41 per share over the past 30 days, indicating 12.7% growth from the figure reported in fiscal 2025.  
 

The Zacks Consensus Estimate for Apple’s fiscal 2026 revenues is pegged at $461.19 billion, indicating 10.8% growth over the figure reported in fiscal 2025.

Apple Suffers From Stiff Competition

AAPL is facing stiff competition from the likes of Lenovo, Dell Technologies and HP in the personal computer (PC) domain. Per Gartner, worldwide PC shipments totaled 71.5 million units in the fourth quarter of 2025, up 9% year over year. For 2025, worldwide PC shipments totaled more than 270 million units, up 9.1% from 2024. Lenovo led with 27.2% market share, trailed by HP and Dell Technologies with 21.5% and 16.5%, respectively. Apple had a 9.4% market share.

The smartphone segment is chock-a-block with competition from Chinese vendors as well as Samsung and Google Pixel. Apple’s issues with its AI initiatives, with the postponement of several features, have been a concern for investors.

Conclusion

Apple’s prospects are expected to benefit from its strong iPhone and Services business. Apple’s expanding AI footprint, thanks to the Google collaboration, bodes well for long-term prospects. However, stiff competition in the smartphone, PC and AI domains, along with a stretched valuation, makes the stock risky in the near term.

AAPL currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to enter the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.