<div id="readability-page-1"><p>Watching companies set individual records on revenue or earnings is always a great sign for investors, as it indicates the company is reaching new heights. However, there are also some metrics you don't want to see companies setting new records in, like debt or valuation.</p> <p><strong>Apple </strong><span>(AAPL<span> -1.33%</span>)</span> has recently set a new record, but it's not for a good reason. I think this is a huge signal for investors to pay attention to in 2025 because it could result in a retreat for the stock price.</p> <h2>Apple's growth has slowed to a snail's pace</h2> <p>Apple has been among the top consumer brands for a long time. Its iPhones are in the hands of the majority of smartphone users in the U.S., who also wear Apple's watches and AirPods, and use Apple computers. While Apple has been dominant for some time, it seems to have peaked.</p> <p>Apple hasn't released meaningful new products or technology for some time, which has caused the company to become fairly stagnant. iPhone sales, the company's largest segment by revenue, haven't increased at a rapid pace for some time.</p> <div><table> <tbody> <tr> <th scope="col">Year</th> <th scope="col">Q4 iPhone Revenue</th> <th>YOY Growth</th> </tr> <tr> <td>2024</td> <td>$46.2 billion</td> <td>5.5%</td> </tr> <tr> <td>2023</td> <td>$43.8 billion</td> <td>2.8%</td> </tr> <tr> <td>2022</td> <td>$42.6 billion</td> <td>9.5%</td> </tr> </tbody> </table></div> <p>Data source: Apple. Note: Q4 ends around Sept. 30 but is different each year. </p> <p>Mid-single-digit percentage revenue growth is a key indicator that a company has reached maturity. This growth rate isn't likely to change unless Apple launches a new product or bumps its prices. However, the company is trading as if its revenue is growing a mid-20% pace or more.</p> <p>Apple's stock has now reached a new decade-high valuation level despite not showing much growth. Although Apple's stock has traded for a higher price-to-earnings (P/E) ratio than this during its life as a public company, this is the first time it has traded this high in its modern state (when iPhone sales are a significant chunk of its revenue).</p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/0c91c541a144a05d063cc1ca25b0ed99.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="456" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/0c91c541a144a05d063cc1ca25b0ed99.png"/></p> <p>AAPL PE Ratio data by YCharts</p> <p>I've also overlayed Apple's revenue growth rate to show that the previous time Apple was valued around 40 times trailing earnings, its revenue was growing at more than 50% year over year. With Apple's revenue now growing at a much slower rate, this valuation seems to be getting out of hand because it won't be able to grow its way into a more reasonable price tag.</p> <p>As a result, Apple probably will return to a more historically normal valuation level through a price decline.</p> <h2>How much of a decline could investors expect?</h2> <p>With Apple growing at a slower pace than the broader market, there's no reason why Apple deserves a premium over the <strong>S&amp;P 500 </strong><span>(^GSPC<span> -1.07%</span>)</span>. With the S&amp;P 500 trading at a trailing P/E ratio of 25.2 and a forward P/E of 21.9, I'd expect Apple stock to trade around those levels <em>if</em> it continues to put up mundane growth. </p> <p>Wall Street analysts project Apple's revenue will rise 6% in fiscal year 2025 (ending September 2025) and 8% in fiscal year 2026, so this slow but steady growth is expected to continue during the next few years. </p>  <p>If Apple's stock falls to a P/E ratio of 30, the stock price would need to decline by nearly 30%. A P/E ratio of 25 (around the S&amp;P 500's valuation) would imply a fall of more than 40%. Now, these exact declines probably won't happen because Apple's earnings will grow each quarter, which will help its P/E ratio come down. However, there likely needs to be some amount of price correction, as years of growth have already been baked into the stock.</p> <p>There aren't many reasons to own Apple over other big tech companies. It's growing slowly and is expensively valued. All it really has going for it as an investment is its name. Investors should think about moving on from Apple stock, as even some of its biggest proponents (like Warren Buffett) have started selling Apple shares during the past year.</p>                                                                                             </div>

AAPL

<p>Apple's stock has reached a historic high in valuation despite slowing growth, signaling potential declines ahead. The company's iPhone sales growth has stagnated, and its current P/E ratio suggests overvaluation compared to the S&P 500. Analysts project modest revenue growth of 6% in fiscal 2025, but if the stock's P/E ratio normalizes, it could face a decline of 30-40%. Investors are advised to reconsider holding Apple shares as its growth prospects diminish and competition increases.</p>

- Apple has recently set a record for its stock valuation, despite experiencing stagnant growth and declining iPhone sales.  
- The company's revenue growth has slowed significantly, leading to concerns that its high price-to-earnings ratio is unsustainable, potentially resulting in a price correction.  
- Analysts project modest revenue increases for Apple in the coming years, but the stock may need to adjust to align with broader market valuations, suggesting investors consider alternatives.  

Apple's Stock Has Reached Historic Levels in One Metric. It's a Clear Warning Sign for 2025.