Apple (AAPL Quick QuoteAAPL - Free Report) shares are overvalued, as suggested by a Value Score of F. The AAPL stock is trading at a forward 12-month price/earnings (P/E) of 33.54X compared with the broader Zacks Computer & Technology sector’s 21.05X.

Apple shares are trading at a premium compared with peers, including Alphabet (GOOGL Quick QuoteGOOGL - Free Report) , Microsoft (MSFT Quick QuoteMSFT - Free Report) and Amazon (AMZN Quick QuoteAMZN - Free Report) . Shares of Alphabet, Microsoft and Amazon are trading at a P/E multiple of 20.47, 24.09 and 23.16, respectively.

Apple Stock’s Valuation

Image Source: Zacks Investment Research

Is Apple worth buying at current prices? Let’s dig deep to find out.

AAPL Rides on Strong iPhone Sales, Improving AI Prospects

Apple shares have appreciated 14.8% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s return of 15.8%. However, the stock has outperformed Alphabet, Microsoft and Amazon over the same time frame. Shares of Alphabet and Amazon have returned 8.9% and 12.9% YTD, respectively, while Microsoft has dropped 0.4%.

Apple Stock’s YTD Price Performance

Image Source: Zacks Investment Research

Apple shares have benefited from a strengthening product cycle, growing Services revenues and optimism around the company’s expanding AI capabilities. iPhone revenues increased 22% year over year to $54.3 billion in the third quarter of fiscal 2026 (June-quarter), while Mac revenues jumped 29% year over year to $10.4 billion. The growth in iPhone shipments was primarily driven by higher sales of Pro models, while Mac benefited from stronger laptop sales. Apple also recorded a June-quarter record for iPhone upgraders, while Mac achieved all-time highs for both upgraders and customers new to the platform.

Apple continues to expect high iPhone demand, forecasting mid-teens year-over-year iPhone revenue growth for the fourth quarter of fiscal 2026 (September-quarter) despite supply and foreign-exchange headwinds. The company’s initiatives to develop next-generation AI capabilities that combine on-device processing with Private Cloud Compute are expected to stimulate future device upgrades. 

Apple’s investments in custom silicon, the Neural Engine, unified memory architecture and power-efficient computing provide the foundation for running AI workloads across iPhone, Mac and other devices. The new Siri AI adds private, personalized and deeply integrated AI capabilities across Apple’s platforms. Early developer and public-beta feedback has been positive. The company also sees potential to monetize heavier AI usage through higher tiers of iCloud+, providing another possible source of Services growth.

Services revenues increased 12% year over year to a June-quarter record of $30.7 billion, with records across every Services category and all-time highs in cloud and payment services. Apple has surpassed 1.5 billion paid subscriptions, while both transacting and paid accounts reached record levels. The installed base of more than 2.5 billion active devices provides Apple with a large platform through which it can expand Apple Pay, iCloud, Apple TV, advertising, AppleCare and other offerings. This expanding ecosystem should support higher recurring revenues and deepen customer engagement over the long term.

Apple’s Prospects Suffer From Multiple Challenges

Supply chain constraints are the most immediate challenge that Apple is facing. The company experienced constraints primarily affecting Mac during the June quarter and, to a lesser extent, iPhone and iPad. These constraints stem largely from limited availability of advanced semiconductor nodes used to manufacture Apple’s system-on-chips. Apple expects the impact to increase significantly in the September quarter and affect all three product categories. Shortages involving advanced semiconductors, NAND storage and DRAM memory could materially pressure revenues, costs and gross margins.

Apple paid significantly more for memory in the June quarter and expects costs to rise further in the fiscal fourth quarter. The company expects market memory pricing to continue increasing beyond the September quarter, potentially producing a growing financial impact. Apple expects foreign exchange to reduce the sequential year-over-year revenue growth rate by roughly 2.5 percentage points in the September quarter, while Services faces particularly meaningful currency pressure.

Moreover, stiff competition from Chinese OEM smartphone vendors, as well as Alphabet, HP, Dell Technologies and Microsoft in the PC and AI domain, is a major headwind. App Store regulation represents a structural risk to Apple’s high-margin Services business. The European Union’s Digital Markets Act has already required changes to the App Store, Safari and Apple’s operating systems. Moreover, interoperability requirements could increase costs and potentially restrict the availability of features such as Siri AI in certain markets.

AAPL’s FY26 Earnings Estimate Revision Shows Rising Trend

The Zacks Consensus Estimate for Apple’s fiscal 2026 earnings has increased by 0.9% to $8.77 per share over the past 30 days, indicating 18.63% growth from the figure reported in fiscal 2025.  
 

The consensus mark for Apple’s fiscal 2026 revenues is pegged at $477.42 billion, indicating 14.72% growth over the figure reported in fiscal 2025.

Conclusion

Apple’s improving earnings outlook, strong iPhone momentum, expanding Services business and growing AI opportunities support its long-term prospects. However, the stock’s forward 12-month P/E of 33.54X represents a substantial premium to the broader sector as well as peers, suggesting that much of the expected growth is already reflected in the current valuation.

AAPL currently has a Zacks Rank #3 (Hold), which implies that investors may prefer to wait for a more attractive entry point while monitoring whether AAPL’s AI initiatives, Services expansion and product-cycle strength can justify its premium multiple. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.