Apple's two most recent quarters have been notably stronger than the twelve months before them, and current filings show the company generating meaningfully more cash than year-old, trailing figures would suggest.
Even so, the stock's price already assumes a lot of good news. It is trading at one of the richest prices relative to its profit in Apple's history, and it now costs more relative to its profit than Microsoft or Google do, which did not used to be the case.
There is real substance behind some of that optimism: sales grew faster than expected the last two quarters, Apple just promised a new AI powered voice assistant, growth in China stayed strong despite competition worries, and the company just approved a huge new stock buyback. Still, the price leaves little room for anything to go wrong.
Overvalued, though grounded in a genuinely improving business rather than pure hype.
About half of Apple's sales come from the iPhone alone, with the rest split between other devices like Macs, iPads, and the Apple Watch, plus a fast growing services business that includes the App Store, Apple Music, iCloud storage, Apple Pay, and advertising. Once someone owns an Apple device, the services side keeps earning money from them for years afterward.
We'd revisit this call if the price falls below $198.00 or rises above $328.00.
These are review triggers for us to take another look, not price targets or a promise the stock will reach them.
| Metric | AAPL (subject) | Peer median |
|---|---|---|
| EV/Sales | 11.18x | 23.62x |
| EV/EBIT | 34.98x | 56.19x |
| EV/EBITDA | 32.15x | 48.13x |
| P/B | 52.25x | 18.17x |
| Gross Margin | 46.9% | 58.6% |
| ROIC | 87.0% | 17.0% |
| ROE | 151.9% | 22.1% |
| Rule of 40 | N.M. | 31.0% |
True TTM revenue through 2026-03-28 is about $451.4B (FY2025's $416.161B minus H1 FY2025's ~$219.7B plus H1 FY2026's $254.940B), 8.5% above the automated screen's $416.161B, independently confirmed by stockanalysis.com at $451.44B (Apple 10-Q filed 2026-05-01; Apple Q2 FY2026 release, 2026-04-30).
Q2 FY2026 (ended 2026-03-28) revenue was $111.2B, up 17% year over year, a March quarter record; diluted EPS $2.01, up 22%. Gross margin was 49.3% versus 47.1% a year earlier. Q1 FY2026 (holiday quarter, ended 2025-12-27) revenue was $143.8B, up 16%, EPS $2.84, up 19% (Apple Newsroom, 2026-01-29 and 2026-04-30).
Using the plan's FCF = OCF minus capex minus SBC formula on a rolled TTM basis: OCF $140.222B (FY2025's $111.482B minus H1 FY2025's $53.887B plus H1 FY2026's $82.627B), capex $11.048B (matches an independently reported finbox TTM capex figure exactly), SBC about $13.473B. TTM FCF is about $115.7B, 34.7% above the $85.904B the automated screen used, exceeding the plan's 20% threshold on its own.
Term debt has fallen to $82.714B plus $2.0B commercial paper (versus the automated screen's stale $91.281B), against $45.572B cash and $101.023B marketable securities, for roughly $62B of net cash. The board approved a fresh $100B buyback and raised the dividend 4% to $0.27 per share on 2026-04-30; Apple has now returned over $1 trillion to shareholders cumulatively.
Trailing P/E is 37.64x versus a 10 year average of 24.86x and a prior 5 year range of 22.3x to 38.1x; forward P/E is roughly 32x to 34x (stockanalysis.com and gurufocus, 2026-07-08). On corrected TTM FCF, FCF yield is about 2.5% at the current $4.6T market cap, versus about 1.9% using the automated screen's stale figure, so Apple is cheaper on cash generation than the automated screen's own row implies, even though its multiple is historically rich.
the automated screen's peer-relative model estimate used a same SIC code peer set (NVDA, MSFT, AVGO, MU, AMD, INTC), a semiconductor manufacturing group with a 48.1x median EV/EBITDA driven by the AI chip cycle, not a business Apple resembles. Against real mega cap software and platform peers, Apple's forward P/E of about 32x to 34x is now above Microsoft's roughly 20x to 22x and Alphabet's roughly 24x to 27x (stockanalysis.com and gurufocus, 2026-07-08), a reversal of Apple's historical discount to those two.
Apple has absorbed about $3.3B in tariff costs since April 2025, with the quarterly run rate rising toward $1.4B; India now assembles about 25% of global iPhone volume, up from under 5% four years earlier, though components remain roughly 90% China sourced, so tariff exposure is not eliminated by reshoring assembly alone (AppleInsider and other trade press, 2025 to 2026).
CEO Tim Cook sold 64,949 shares on 2026-04-02 for about $16.5M under a Rule 10b5-1 plan dated 2024-05-24, alongside routine RSU vesting and tax withholding; this reads as scheduled selling, not a distress signal (SEC Form 4, 2026-04-02).
Catalysts: Q3 FY2026 earnings on 2026-07-30 (guided 14% to 17% revenue growth, well above the roughly 9.5% consensus expected ahead of the Q2 print); a Gemini powered Siri rollout in two phases, spring 2026 and September 2026 with iOS 27; iPhone 18 launch around September 2026. Risks: the EU General Court on 2026-07-08 upheld the Digital Markets Act gatekeeper designation of the App Store and iOS and rejected Apple's iMessage challenge, forcing continued third party store and payment support, with a separate 500M euro penalty still contested; tariff cost escalation; a Siri upgrade that has already slipped more than once.
Greater China revenue grew 28.1% year over year in Q2 FY2026 despite a widely repeated narrative that Huawei is displacing Apple there; the new $100B buyback and dividend increase are a costly, hard to reverse signal of confidence in durable cash flow; Q3 guidance of 14% to 17% growth beat prior Street expectations of about 9.5%, arguing demand is broader than a single supply catch up quarter.
A scenario check (24x to 36x applied to TTM to modestly forward EPS of about $8.25 to $9.10) puts Bear near $198, Base near $248, and Bull near $328; the 2026-07-08 price of $313.83 sits about 82% of the way from Base to Bull, close to pricing the optimistic scenario. Falsification: two consecutive quarters of negative Greater China growth, or a Q3 print below the low end of Apple's own 14% guidance, would undercut the reacceleration thesis behind the Base and Bull cases.
Mechanical model output, a screen, not a fair value.conservative screen, understates growth/AI-capex names
A scenario check applying Apple's own historical price to earnings range (10 year average 24.86x, prior 5 year range 22.3x to 38.1x) to corrected trailing and near term forward EPS of about 8.25 to 9.10 dollars puts Bear near 198 dollars, Base near 248 dollars, and Bull near 328 dollars; the 313.83 dollar price sits about 82% of the way from Base to Bull, close to pricing the optimistic case rather than a mid cycle multiple.
Research flagged that one or more mechanical-screen inputs look invalid or distorted (e.g. a data-extraction issue or a capex/FCF definition mismatch); the research verdict was independently re-derived from primary filings, not just a check on the same numbers.
Confidence = 0.7 × research sub-score + 0.3 × mechanical sub-score. Mechanical sub-score rewards the Layer 1 screen for agreeing with Layer 2's direction (corroboration), not just for being conviction=NORMAL in isolation.