Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Apple.

Our Discounted Cash Flow (DCF) analysis suggests Apple may be overvalued by 10.3%. Find undervalued stocks or create your own screener to find better value opportunities.

The Price-to-Earnings (PE) ratio is a popular valuation metric for profitable companies like Apple because it shows how much investors are willing to pay for each dollar of current earnings. For established businesses with strong profitability, the PE ratio is often the first stop for fair value checks, making it especially relevant here.

Of course, what counts as a “normal” PE depends on context. Companies with higher expected growth, lower perceived risks, or more consistent profitability typically deserve a higher PE. Conversely, lower growth or added risks mean a lower multiple is reasonable. In Apple’s case, the current PE ratio is 38.4x. To see if this is fair, we can look at some benchmarks: the average PE for global tech peers is 34.3x, while the broader tech industry clocks in at 23.9x. Apple’s PE sits above both.

However, just comparing multiples doesn’t tell the full story. Simply Wall St’s proprietary “Fair Ratio” model considers much more. It calculates the PE multiple Apple should trade at by weighing growth outlook, profitability, risk factors, industry trends, and the company’s market cap. For Apple, this model suggests a Fair Ratio of 42.1x. This means Apple’s current PE is actually a little below what the model deems reasonable.

Why use the Fair Ratio instead of just peers and industry? Because it is designed to factor in what really sets Apple apart, including its earnings quality, growth prospects, and competitive position, not just surface-level averages. That gives a much better context for judgement.

With Apple’s actual PE only slightly below its Fair Ratio, the stock appears priced ABOUT RIGHT relative to its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story about a company like Apple: what you believe about its future, why, and how those beliefs translate into numbers such as revenue growth, profit margins, and ultimate fair value.

Unlike traditional valuation models that reveal only one answer, Narratives let you connect what’s happening in the real world to financial forecasts. You can easily build, edit, and follow different Narratives inside the Simply Wall St Community, where millions of investors use this tool to share their perspectives and see how their “story” compares to others.

With Narratives, you are empowered to explore whether Apple’s current price reflects your own view of its fair value or if it’s time to buy, sell, or hold. The power of this approach is that Narratives are dynamic: each one refreshes automatically whenever new financial results or news lands, ensuring your analysis stays relevant.

For example, some investors expect resilience and AI-driven growth, valuing Apple as high as $275 per share, while others take a much more conservative view, seeing fair value closer to $177. This shows how Narratives help you visualize and act on what matters to you most.

For Apple, however, we’ll make it really easy for you with previews of two leading Apple Narratives:

🐂 Apple Bull Case

Fair Value: $275.00

Price vs Fair Value: 6.5% undervalued

Forecasted Revenue Growth: 12.78%

• Apple is overcoming challenges from steep U.S. tariffs and shifting production to countries like India and Vietnam, which is buffering profit margins.

• Strong financials continue, with Q1 2025 profits beating expectations and services revenue at record highs. Analysts maintain a “Moderate Buy” rating, with upside potential indicated by several raised price targets.

• Strategic investments in AI and brand loyalty are expected to drive robust long-term growth. These factors could help Apple navigate short-term volatility due to geopolitical tensions and supply chain changes.

🐻 Apple Bear Case

Fair Value: $207.71

Price vs Fair Value: 23.8% overvalued

Forecasted Revenue Growth: 6.39%

• EU regulations and costly supply chain shifts, such as manufacturing in the U.S., are expected to put pressure on Apple’s profit margins and slow top-line growth.

• Weak strategies in emerging markets like India and South America could limit Apple’s expansion, with price points remaining out of reach for many consumers along with strong competition from more affordable alternatives.

• Heavy reliance on service revenue, particularly lucrative deals like the Google partnership, introduces risk. Bets on new technology, such as Apple Vision Pro, add further uncertainty and potential reputational risk.

Do you think there’s more to the story for Apple? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AAPL.

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