Apple (AAPL 1.15%) has done its part to lift the holiday spirits of its shareholders as 2024 comes to an end. At the time of this writing, the stock has surged 30% year to date, continuing the company’s tradition of crushing Wall Street. Indeed, Apple’s 269% return in just the past five years has more than tripled the S&P 500 index’s 82% gain over the same period.

Should investors expect the rally to continue in 2025 with another record-breaking year for this consumer electronics juggernaut? Let’s explore where Apple stock might be by this time next year.

Apple Intelligence driving growth

There’s a lot to like about Apple, which has cemented itself as one of the world’s most influential consumer brands and technology innovators. The company’s premium device lineup, from its flagship iPhone and Mac computers to its expanding collection of wearables and accessories, is recognized for its exceptional quality and fervent customer loyalty.

It’s no coincidence that legendary investor Warren Buffett counts Apple as the single largest holding within the stock portfolio of his financial conglomerate Berkshire Hathaway. Buffett has long emphasized the importance of sticking with companies that offer a superior product that consumers love as a key trait for long-term success. By all indications, Apple will continue growing and hold its leadership position for decades. Individual investors will be hard-pressed to find another stock with Apple’s fundamental strength and competitive moat.

Looking ahead, Apple isn’t simply resting on its past achievements. The company is advancing a strategic vision centered on leveraging new artificial intelligence capabilities across its devices and broader services ecosystem.

Apple CEO Tim Cook believes the recently launched Apple Intelligence platform marks a “new era” for the company, integrating features like generative text and generative images, and a more advanced Siri voice assistant chatbot. The effort enhances the user experience with fun and productivity-boosting tools while also opening new growth channels. Overall, Apple has a strong operating and financial tailwind highlighting its positive outlook.

Image source: Getty Images.

A strong outlook into 2025

With more than 2.2 billion active Apple devices worldwide, Apple Intelligence stands to deliver the power of AI to the masses in a familiar and easy-to-use interface. The expectation is that the company will benefit not only from increased interest in the new technology kick-starting a refresh cycle but also from a resilient macroeconomic backdrop.

Compared to Apple’s completed fiscal 2024 (for the period ended Sept. 28) in which revenue increased by a modest 2%, Wall Street analysts are projecting a stronger 2025 with a 6% growth rate. Even more impressive is the 21.5% higher estimated earnings per share (EPS) this new year, driven by improving profitability margins from Apple’s diverse group of high-growth services. Apple’s results over the next few quarters, including the ongoing holiday shopping season, will be critical to Apple Intelligence’s early impact.

Data source: Yahoo Finance. YOY = year over year.

A pricey valuation warrants some caution

Before investors get too excited about the company’s potential in 2025, a couple of points warrant some caution.

Shares of Apple are trading at 34 times its consensus 2025 EPS, a level that is now well above the five-year average for the valuation multiple closer to 29 suggesting the stock is relatively expensive. While Apple’s strengthening position as an AI-powered consumer brand with growing services revenue could justify that premium valuation, questions remain about how much higher the earnings multiple can expand. An argument could be made that the company’s strong near-term outlook is already reflected in the stock price. Nevertheless, the bullish case for the stock is that Apple manages to outperform expectations.

AAPL PE Ratio (Forward) data by YCharts

My Apple prediction for 2025

It likely won’t be a straight line higher, but I see a good chance that Apple will be trading at a higher share price in one year. Unless there is some clear evidence that the circumstances have materially changed, the prudent move for investors is to stay the course. Apple remains a great stock that deserves a spot within a diversified portfolio.