Apple (NASDAQ: AAPL) stock has lagged many of the other ‘Magnificent 7’ shares in 2025. Year to date, it’s down about 14%.
Should British investors consider buying the stock given this recent share price weakness? Let’s discuss.
Potential for growth
Apple is one of the largest companies in the world today, with a market cap of around $3.2trn. But I believe it has the potential to get bigger. Given its loyal user base, it should be able to continue to grow. This could be by selling new, more expensive iPhone models, offering valuable smartphone services (such as payments and digital healthcare), and taking a cut of App Store sales.
New hardware products could also be a potential growth driver. I wouldn’t be surprised to see the company’s Vision Pro goggles morph into the kind of smart glasses that Meta Platforms is currently having success with.
It’s worth pointing out that while Apple hasn’t done a lot on the artificial intelligence (AI) front yet, it could still be a major player in this area of technology. That’s because it has the perfect hardware platform to bring AI to consumers (there are around 1.4bn iPhone users globally).
Recently, there has been some talk of a $20bn-$30bn deal for generative AI powerhouse Perplexity (a rival to ChatGPT). It may never happen, but if it does go through, it could catapult the company into the AI revolution.
A high valuation today
Having said all that, I’m not convinced this is the best time to buy the stock. I think it looks quite pricey relative to the growth it is generating.
Currently, Apple’s top-line growth is quite sluggish. This financial year (ending 30 September 2025), revenue is only expected to increase 4%.
Yet the valuation remains elevated. At present, the stock is trading on a forward-looking price-to-earnings (P/E) ratio of about 30. Wall Street expects Apple to generate earnings per share of $7.17 this financial year.
To my mind, the stock isn’t a Buy at that earnings multiple. I’d prefer to buy it when the P/E ratio is under 25. That translates to a max share price of about $180 today.
Patience required
I’ll point out that I believe that there will be opportunities to buy the stock at more attractive valuations over the next year or so. At some stage, investors are likely to get spooked and sell the stock, creating an opportunity for those waiting patiently to buy it.
The sell-off could be related to a company-specific issue, like a revenue or earnings disappointment, or concerns over a new product from rivals. Or, it could be related to broader market weakness.
Whatever causes it, I think the pullback will create an opportunity. Because, as I said above, I reckon this technology company is going to grow in the long run.
