<div id="readability-page-1"><p>We have entered the heart of the earnings season for the fourth quarter of 2024. <strong>Tesla</strong>, <strong>Meta Platforms</strong>, and other big technology companies will be updating investors with their financial results this week.</p> <p>One stock I will be watching closely is <strong>Apple</strong> <span>(AAPL<span> 3.65%</span>)</span>. The smartphone leader has seen slowing growth in the last few years -- although its stock has performed well -- and will be releasing numbers for the crucial holiday period, its fiscal Q1. Now is a big test for the company as it searches for ways to expand beyond the iPhone smartphone business. </p> <p>Along with a broad market sell-off, Apple shares have fallen 10% in the last month. Should you buy Apple stock before it reports earnings on Jan. 30?</p> <h2>Slowing growth, betting on services revenue</h2> <p>With the dominant iPhone franchise, Apple has grown into one of the largest companies in the world in the last two decades. Over its fiscal 2024 (ended Sep.28), the company reported $391 billion in revenue, with over half of these sales coming from the iPhone segment. Ten years ago, the company was generating under $200 billion in revenue.</p> <div><table> <tbody> <tr> <th colspan="4">Apple (Consolidated Financials)</th> </tr> <tr> <th scope="col">Metrics</th> <th scope="col">Fiscal 2024</th> <th scope="col">Fiscal 2023</th> <th scope="col">%Change</th> </tr> <tr> <td>Products Revenue</td> <td>$295 billion</td> <td>$298 billion</td> <td>(1%)</td> </tr> <tr> <td>Software and Services Revenue</td> <td>$96 billion</td> <td>$85 billion</td> <td>13%</td> </tr> <tr> <td>Operating Income</td> <td>$123 billion</td> <td>$114 billion</td> <td>8%</td> </tr> </tbody> </table></div> <p>Chart by author. Source: Apple Q4 2024 Financial Filing.</p> <p>However, in the last few years, Apple's growth has stalled out. In fact, it hasn't grown at all since the end of 2022. As detailed in the chart above, products revenue -- which encompasses iPhone and other hardware sales -- slipped over the 12-month period. With slower upgrade cycles and market share losses in places like China, Apple has found itself selling fewer devices each year, leading to revenue declines despite rising selling prices for its products.</p> <p>Software and services revenue is the one bright spot for the company. The high-margin segment that includes subscriptions, App Store revenue, and licenses from <strong>Alphabet</strong>'s Google Search generated strong year-over-year revenue growth.</p> <p>The rising impact of services revenue is why Apple's operating income grew to $123 billion. Services revenue won't replace the entire business -- you need people to buy hardware first before using the software -- but is a nice boost for the company in a period of slowing hardware sales. </p>  <h2>Rising earnings multiple and Warren Buffett sales</h2> <p>Despite this stagnating revenue, Apple stock is up around 200% in the past five years, which is more than double the return of the<strong> S&amp;P 500</strong> <span>(^GSPC<span> 0.92%</span>)</span>. Stock appreciation is important, but so is valuation. Five years ago, Apple stock had a trailing price-to-earnings ratio (P/E) of 24. Today, its P/E is 38. This is much higher than the market average of 30, which should give investors pause.</p> <p>We have seen some troubling developments from Warren Buffett and <strong>Berkshire Hathaway</strong>, Apple's largest shareholder that is not an index fund. Buffett has dumped over half of Berkshire's Apple stock in 2024, raising over $100 billion in cash. The value-focused investor is likely concerned about Apple's rising valuation, which we can see with its elevated P/E ratio. Apple is still Berkshire Hathaway's largest stock holding, valued at around $70 billion, but it wouldn't be surprising to see Buffett keep selling in the coming quarters as long as the stock price stays elevated. </p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/daae2e2f0d44d1dcae75582547e0a9f7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="441" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/daae2e2f0d44d1dcae75582547e0a9f7.png"/></p> <p>AAPL PE Ratio data by YCharts</p> <h2>Should you buy Apple stock before Q4 earnings?</h2> <p>It's hard to get excited about Apple stock right now. iPhone revenue is stagnating, and the company doesn't seem to have products on the horizon that will be meaningful to the business. The Vision Pro launch was a huge bust, its progress in artificial intelligence (AI) is well behind its peers, and other hardware products such as the Apple Watch and AirPods are not enough to drive growth for the business.</p> <p>Apple is a wonderful business, which is why it generates over $100 billion in earnings each year and is one of the largest companies in the world by market capitalization. It is perhaps the best consumer brand in the world. Ardent Apple fans will only buy an iPhone as their smartphone of choice -- they won't even look at what the competition offers.</p> <p>However, that doesn't mean you can ignore valuation when analyzing the stock. Apple is a low-growth business trading at a P/E of 38, meaning it is likely overvalued and probably will continue to be so for investors going forward. Returns are not going to mirror the last decade just because it is Apple.</p> <p>Therefore, I wouldn't rush to buy Apple before its upcoming earnings report -- you can find some cheaper technology stocks to add to your portfolio instead.</p>                                                                                             </div>

AAPL

<p>As Apple prepares to report its Q4 earnings on January 30, investors are questioning whether to buy its stock. Despite a 200% increase in stock value over the past five years, Apple's growth has stagnated, particularly in iPhone sales, which account for over half of its $391 billion revenue in fiscal 2024. The company's P/E ratio has risen to 38, raising concerns about overvaluation, especially after Warren Buffett sold a significant portion of his Apple shares. Analysts suggest caution, as Apple's low growth and high valuation may not yield similar returns as in the past.</p>

- The article discusses Apple's upcoming earnings report amid a challenging growth environment, highlighting a 10% decline in shares over the past month.  
- Despite generating $391 billion in revenue for fiscal 2024, with a significant portion from iPhone sales, Apple's growth has stagnated since 2022, raising concerns about its high valuation with a P/E ratio of 38.  
- The author suggests caution for potential investors, indicating that Apple may be overvalued and recommending consideration of other technology stocks instead.

Should Investors Load Up on Apple Stock Before Jan. 30?