Apple (AAPL Quick QuoteAAPL - Free Report) shares have appreciated 24% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s return of 25.8%. However, the stock has outperformed Alphabet (GOOGL Quick QuoteGOOGL - Free Report) , Microsoft (MSFT Quick QuoteMSFT - Free Report) and Amazon (AMZN Quick QuoteAMZN - Free Report) over the same time frame. Shares of Alphabet, Amazon and Microsoft have returned 12%, 12.7% and 9.6%, respectively, YTD.

Apple Stock’s YTD Price Performance

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Apple shares have benefited from a strengthening product cycle, growing Services revenues and optimism around the company’s expanding AI capabilities. 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. So, what should investors do with AAPL stock? Let’s find out.

Foldable iPhone to Boost Apple’s Prospects

Apple has expanded its flagship smartphone portfolio with the iPhone Duo, its first foldable iPhone, opening a new product category that could strengthen the company’s upgrade cycle and deepen engagement across its hardware, AI and services ecosystem. The launch comes against a strong backdrop for iPhone, which generated $54.3 billion in third-quarter fiscal 2026 (June quarter) revenues, up 22% year over year. 

The launch of the foldable iPhone bodes well for Apple’s prospects. iPhone sales have been benefiting from higher shipments of premium Pro models. The introduction of another highly differentiated device could therefore help sustain demand among customers seeking premium features and potentially strengthen Apple’s product mix. Apple Upgrade could further support adoption. The recently launched U.S. leasing program is intended to make the company’s latest products more affordable for customers who prefer to upgrade on a regular schedule, with early feedback described as positive.

iPhone Duo is also expected to strengthen Apple’s Services opportunity. The company ended the latest quarter with more than 1.5 billion paid subscriptions, while Services revenues increased 12% year over year to $30.7 billion. A larger display optimized for multitasking, video, apps and AI could increase engagement across the App Store, iCloud and other services. Apple has also indicated that heavy Siri AI users may eventually have opportunities to move to higher iCloud Plus plans, creating an additional monetization avenue.

Apple’s expanding Services portfolio remains a major long-term growth catalyst. Services revenues increased 12% year over year to $30.7 billion in the third quarter of fiscal 2026, supported by strength in cloud services, payments, advertising and digital content. The company surpassed 1.5 billion paid subscriptions, while its installed base exceeded 2.5 billion active devices. Services' gross margin of 75.6% highlights the segment’s profitability. Increasing adoption of Apple Pay, iCloud, Apple Music and Apple TV is expected to strengthen recurring revenues, improve customer retention and support long-term profitability.

Although Apple expects high iPhone demand, it has warned that supply constraints affecting advanced-node chips are limiting iPhone, Mac and iPad availability. Memory costs are also rising. These factors could restrict Apple’s ability to fully capitalize on initial iPhone Duo demand. In fact, the memory shortage and rising prices have been blamed for declining global smartphone sales, which dropped 7% year over year in the second quarter of 2026, per Counterpoint Research. Samsung reclaimed the global leadership position with a 23% market share and growing 9% year over year, while Apple recorded 13% year-over-year growth and its highest second-quarter market share (21%), driven by the continued strength of the iPhone 17 series.

AAPL’s FY26 Earnings Estimate Revision Shows Steady Trend

The Zacks Consensus Estimate for Apple’s fiscal 2026 earnings has increased by a penny to $8.86 per share over the past 30 days, indicating 18.8% growth from the figure reported in fiscal 2025.  
 

The consensus mark for Apple’s fiscal 2026 revenues is pegged at $477.45 billion, indicating 14.73% growth over the figure reported in fiscal 2025.

Apple’s Shares are Overvalued

Apple 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 35.18X compared with the broader sector’s 21.29X.

Apple shares are trading at a premium compared with peers, including Alphabet, Microsoft and Amazon. Shares of Alphabet, Microsoft and Amazon are trading at a P/E multiple of 21.72, 25.7 and 23.34, respectively.

Apple Stock’s Valuation

Image Source: Zacks Investment Research

Conclusion

Apple’s strong iPhone upgrade cycle, expanding high-margin Services business and growing AI capabilities bode well for its long-term prospects. The launch of the foldable iPhone Duo is expected to strengthen its premium smartphone portfolio and create additional monetization opportunities. However, rising memory costs, supply-chain constraints and intense competition remain concerns. Moreover, AAPL’s premium valuation compared with the broader sector and peers limits its near-term upside potential. Despite solid earnings growth expectations and improving business fundamentals, the stock’s stretched valuation warrants caution. Investors may consider holding AAPL shares while awaiting a more attractive entry point.

Apple currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.