Short Apple Stock – Now?
There may be trouble ahead for Apple stock (NASDAQ:AAPL). Here’s why. The stock has more than doubled over the last three years – rising from roughly $130 at the end of 2022 to near all-time highs around $275 today. Yet, revenues have been about flat over this period. Profit margins have trended higher, but barely so.
So, the stock doubled because the P/E multiple doubled. Do you like that? We don’t. We describe more below.
So what?
Apple’s revenue growth has been anemic. Over the last three fiscal years, revenues have grown at only about 2.4% annually. The boost this year from an iPhone 17 upgrade cycle is likely to be a blip, not secular.
Sure, operating margins have improved from 30.3% in 2022 to 31.9% now, but largely due to mix rather than accelerating demand. Profitability has edged higher as services have grown faster, while hardware sales have lagged, indicating Apple is benefiting more from pricing and composition effects than from volume-led growth.
At the same time, Apple appears to be missing the AI wave, the single biggest trend in tech today. Advanced Siri upgrades have faced repeated delays, and Apple’s AI offerings are widely viewed as lagging rivals such as Google. Vision Pro, Apple’s first major new product category in almost a decade, has also disappointed, with first-year unit sales estimated at just 400,000 to 500,000 units.
This stock rally has not been driven by improving fundamentals. Instead, it has been driven by aggressive financial engineering.
Over the past three years, Apple has spent roughly $280 billion on share buybacks, sharply reducing shares outstanding and boosting EPS. In the most recent fiscal year alone, Apple spent $91 billion on buybacks, compared with about $34 billion on R&D and just $13 billion on capital expenditures.
This capital allocation matters.
Companies that deserve premium multiples typically reinvest heavily to extend their growth runway. Take Google, for instance. It is ramping investment aggressively, lifting 2025 capital expenditure guidance to $91 to 93 billion to build AI infrastructure and secure long-term dominance. Apple may be choosing the opposite path: returning capital at scale while under-investing in new growth engines.
And that brings us to valuation.
Apple now trades at roughly 9.9x price-to-sales, near all-time highs and well above historical norms, even during the Steve Jobs era. Forget Steve Jobs and his marketing prowess – no matter what Jobs said, no matter how much he impressed, Apple never traded at this multiple.
A multiple like this implies strong, durable growth ahead.
Yet revenues are near-flat, AI execution is slow, new product initiatives have underwhelmed, and capital is flowing overwhelmingly to buybacks rather than to R&D or capex. Apple is being valued like a company entering a new growth phase, but its revenues, innovation, and capital allocation suggest otherwise. That disconnect is the key risk at today’s valuation. See our full Apple analysis here
Whether you want to buy, sell – or sell short Apple stock – or not, there is definitely a lot of reason to pause and reflect. And if you’d rather manage risk differently, with quality companies in a portfolio – here’s the Trefis High Quality Portfolio that has outperformed the market benchmark – that combines all three, S&P 500, midcap, and Russell 2000. HQ has 30 stocks, median cash flow margins over 20% as-well-as strong balance sheet, and revenue growth. See HQ performance metrics.
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