Apple Stock Is Down 23% From Its All-Time High. Here's Why I'm Still Not Buying Shares.

Apple (AAPL 3.43%), the world's largest company, fell alongside most other stocks during this month's market downturn. It's around 23% off its all-time high, which is likely causing many investors to question whether now is a good time to buy the stock. Although Apple is down significantly, I don't think today's prices are a buying opportunity. Apple is still rather expensive compared to some other big tech stocks, and it would need to tumble further before I'd consider taking a position. Apple's primary revenue driver hasn't grown in years Apple is one of the most recognizable brands on earth due to its strong foothold in the smartphone sector, a device the vast majority of Americans own. However, that market is saturated and isn't growing like it used to. Furthermore, Apple hasn't released an innovative feature on its iPhones in a long time, so consumers are not upgrading their smartphones as often. With iPhones being the largest segment within Apple by far (iPhone sales made up 56% of Apple's revenue during its last quarter), this stagnation isn't great for the company. However, this isn't just a 2024 issue; it has been happening for some time. The first quarter of Apple's fiscal year (which ended Dec. 28, 2024 for Apple's fiscal year 2025) is the company's most important iPhone quarter, because it encompasses the Christmas holiday. But iPhone sales during this time frame haven't budged over the past five years. Fiscal Year Q1 iPhone Sales 2021 $65.6 billion 2022 $71.6 billion 2023 $65.8 billion 2024 $69.7 billion 2025 $69.1 billion Data source: Apple. When you consider other factors like inflation, this lack of growth becomes even more of an issue. Another factor that could harm Apple's business is tariffs. Apple's iPhones are assembled in China, but they recently received temporary relief from tariffs as they were recategorized. They still face a 20% tariff as of right now. However, Commerce Secretary Howard Lutnick said semiconductor-related tariffs are coming, and Apple likely won't escape those. So, Apple has three choices: Eat the cost of tariffs, Pass those costs on to the consumer, or Pass those costs on to the supplier. The only way Apple's finances aren't harmed is option No. 3, but it's likely that it won't be able to pass along that much of the costs to the supplier. As a result, Apple could struggle until it moves some of its business back into the U.S. Those aren't great prospects for Apple, yet the stock still has a premium valuation. Apple's stock still isn't cheap despite the sell-off Even after the stock has tumbled 23%, Apple's stock still fetches a hefty premium. AAPL PE Ratio data by YCharts Apple still trades above where it did from a trailing price-to-earnings (P/E) ratio perspective for most of 2021 through the beginning of 2024. Even its forward P/E ratio isn't attractive, as Apple's growth isn't expected to be strong this year or next. Wall Street analysts only project 4.2% revenue growth in fiscal year 2025 and 7.2% in fiscal year 2026. A large chunk of the "Magnificent Seven" cohort has much better growth prospects and trades for a lower valuation than Apple does. As a result, I think investors should take a look at those stocks rather than waste time with Apple. The only thing propping up its valuation is its brand, which won't mean a whole lot if the consumer can't afford a tariff-impacted iPhone.