Apple Rises 9% in a Month: Buy, Sell or Hold the AAPL Stock?

Globe and Mail

4 days ago

Apple AAPL shares have risen 8.9% in the past month, driven by strong third-quarter fiscal 2025 results and a steady outlook despite tariff-related headwinds. Since the results announced on July 31, AAPL shares have appreciated 9.4%. Since Aug. 6's announcement of increasing U.S. investments to $600 billion, Apple shares have climbed 6.5%.
Apple is benefiting from the growing adoption of Apple Intelligence that is infused across iPhone, Mac, and iPad. The company reported record June quarter revenues in more than two dozen countries and regions, including the United States, Canada, Latin America, Western Europe, the Middle East, India and South Asia. The robust performance was driven by double-digit growth across iPhone (13.5% year over year), Mac (14.8% year over year) and Services (13.3% year over year).
For iPhone, Apple saw double-digit growth in emerging markets, including India, the Middle East, South Asia and Brazil. Services grew double-digit in both developed and emerging markets. Apple Intelligence is playing a key role in driving this growth thanks to the addition of more than 20 features that include visual intelligence, cleanup and powerful writing tools.
Although Apple continues to play catch-up in the AI domain against Amazon AMZN, Microsoft MSFT, and Alphabet GOOGL, the third-quarter 2025 results reflect encouraging progress. Year to date (YTD), Apple shares are down 9.2%, underperforming the broader Zacks Computer and Technology sector's return of 13.5% and the trio. YTD, Microsoft, Alphabet, and Amazon shares have appreciated 23.8%, 6.2% and 0.9%, respectively.
Apple Stock's YTD Performance
AAPL shares are now trading above the 50-day and 200-day moving averages, indicating a bullish trend.
Apple Trades Above 50-day and 200-day SMAs
Apple Intelligence Features to boost AAPL Stock's Prospects
In April, Apple expanded the availability of Apple Intelligence with iOS 18.4, iPadOS 18.4, and macOS Sequoia 15.4 updates in new languages, including French, German, Italian, Portuguese (Brazil), Spanish, Japanese, Korean, and Chinese (simplified), as well as localized English for Singapore and India. At the end of 2025, Apple Intelligence will be available in eight more languages: Danish, Dutch, Norwegian, Portuguese, Swedish, Turkish, Chinese (traditional) and Vietnamese.
At this year's annual Worldwide Developers Conference, Apple announced new Apple Intelligence features like Live Translation, updates to visual intelligence, as well as enhancements to Image Playground and Genmoji. Shortcuts can access Apple Intelligence directly. Developers also get access to the on-device large language model, which is at the core of Apple Intelligence. The latest features are now available for testing and are expected to be generally available this fall with supported devices.
Apple is expanding Services with AutoMix and Lyrics Translation features in Apple Music. Sing will allow users to transform their iPhones into a handheld microphone for Apple TV, while preferred routes and visited places in Apple Map make navigation easier for users. Apple Intelligence is now getting added to Apple Wallet, and users can make purchases with Apple Pay. Powered by Apple Intelligence, Apple Wallet can now automatically identify, summarize and display order tracking details from emails sent from merchants or delivery carriers. Meanwhile, Apple Pay expands the ability to pay with rewards and installments to in-store purchases for added flexibility and choice.
Apple's U.S. Investments to Appease Trump, Escape Tariffs
Apple now plans to spend $600 billion across the United States over the next four years. The plan includes the American Manufacturing Program (AMP), which is dedicated to bringing more of Apple's supply chain and advanced manufacturing to the U.S. AMP partners include Corning, Coherent, GlobalWafers America, Applied Materials, Texas Instruments, Samsung, GlobalFoundries, Amkor and Broadcom.
Apple currently partners with thousands of suppliers across all 50 states in the U.S., supporting more than 450,000 supplier and partner jobs. In the next four years, AAPL plans to directly hire 20,000 people in the U.S. in roles including research and development, silicon engineering, software development, and AI and machine learning.
Apple's accelerating U.S. investments are expected to appease U.S. President Donald Trump, who has criticized the iPhone maker's strategy of manufacturing iPhones sold in the United States in other countries, including India. The latest announcement is expected to help Apple escape potential tariff threats.
Tariffs are currently expected to have a negative impact of roughly $1.1 billion in the fourth quarter of fiscal 2025. Apple expects gross margin between 46% and 47% for the current quarter compared with a gross margin of 46.5% in the fiscal third quarter.
Apple's Q4 Revenues to Grow Amid Tariff Threats
Apple expects the September quarter's (fourth-quarter fiscal 2025) net sales to grow mid to high single digits on a year-over-year basis. The company expects the Services year-over-year growth rate to be similar to that of the June quarter.
The Zacks Consensus Estimate for Apple's fourth-quarter fiscal 2025 revenues is pegged at $100.37 billion, indicating 5.73% growth over the figure reported in the year-ago quarter. The consensus mark for earnings has increased 8.1% to $1.73 per share over the past 30 days, indicating 5.5% growth from the figure reported in the year-ago quarter.
Apple Shares are Overvalued
AAPL stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
Apple is trading at a forward 12-month Price/Sales (P/S) of 7.93X compared with the sector's 6.78X, Amazon's 3.14X and Alphabet's 6.79X. However, Microsoft's P/S of 11.91 is higher than Apple.
Price/Sales (F12M)
Conclusion
Apple is expected to benefit from growing adoption of Apple Intelligence and expanding features. The company's investments in expanding its manufacturing footprint in the United States are expected to help lower tariff-related headaches. Investors already holding AAPL shares should continue to do so based on these factors. However, stretched valuation is a concern for prospective investors.
AAPL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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