Apple Stock Has a Growth Problem. Is It Really Worth Its Premium Valuation?
Investors are hoping AI will come to rescue the tech giant's underwhelming top line.
The stock market often rewards companies it believes have strong future growth potential with premium valuations. In the case of Apple (NASDAQ: AAPL), investors have bid up shares to roughly 35 times earnings -- a level that implies big growth expectations from the Street.
But a closer look at Apple's recent performance raises questions about whether the company's growth trajectory can live up to this lofty valuation.
Apple's recent financial results don't paint the picture of the growth stock you'd expect given its high valuation. In the company's fiscal first quarter of 2025, which covered the holiday shopping season, Apple reported revenue of $124.3 billion, representing just 4% year-over-year growth. More concerning for investors should be the performance of the iPhone -- Apple's flagship product that still accounts for over 56% of total revenue. iPhone sales actually declined 8% year over year during the period.
