Analyst: Apple Inc. (AAPL.US) is in a "growth dilemma", high valuation makes it difficult to find new support points.

Apple Inc. (AAPL.US) is one of the few large technology stocks in the United States that performed poorly in 2025, with a performance of 8.5% lagging significantly behind the S&P 500. Financial analyst A.J. Button published his views, stating that there are several reasons why Apple Inc. performed poorly in 2025. Firstly, the company has almost not achieved revenue growth, and free cash flow has seen negative growth. Secondly, compared to its peers, the company's artificial intelligence (AI) strategy is considered insufficient, especially as Apple Intelligence received low reviews from critics. Thirdly, some recent product releases (such as Apple Vision Pro) have been seen as failures. Button does not assert whether these actions were truly failures, stating that the focus is on the market perception. These facts explain why Apple Inc. performed poorly in 2025, and this may also foreshadow the company's future. While Apple Inc. has a strong brand and loyal customer base, its size is so large that it is difficult to find meaningful investment opportunities. For a small start-up company with sales of $10 million last year, a product launch that brings in $1 billion in annual recurring revenue (ARR) means a 10,000% year-on-year growth. However, for a company with annual revenue already at $416 billion, the same $1 billion product launch represents only 0.2% growth. This illustrates the meaning of Warren Buffett's quote "Size is the anchor of performance": the larger the size, the harder it is to achieve above-average investment returns. This is the predicament Apple Inc. faces today. The company's revenue and profit are already very large, making it difficult to find truly game-changing new investment opportunities (such as new products or services). Its recent attempt with Apple Vision Pro clearly failed. Another attempt with Apple Inc. cars was also shelved after investing billions of dollars in research and development. Therefore, Apple Inc. finds it difficult to find investment opportunities that can truly change the game. This is not to say it is entirely impossible; for example, a large investment in NVIDIA Corporation (NVDA.US) stock three years ago could have brought about a change; however, Apple Inc. is not a company specializing in investment management, and its leaders may not be adept at stock picking. Therefore, Apple Inc.'s potential "investment" opportunities actually lie in research and development investments that bring about new products and services, and the company seems to struggle to find big enough new opportunities to drive growth. Previously, Button rated the stock as "neutral" due to the threat of Trump's tariffs on China. However, as both the US and China reached exemptions on electronic product tariffs, Apple Inc. largely survived the year. This surpassed his expectations for the year. However, the current valuation of Apple Inc. stock implies growth expectations, although the company is no longer growing rapidly. Based on this and other reasons, Button maintains a "neutral" rating on Apple Inc. Competitive Position Firstly, we should examine the competitive position of Apple Inc. This field is actually positive, as Apple Inc. has a strong competitive position due to its brand strength, integrated ecosystem, and loyal fan base. The strength of the Apple Inc. brand is evident, having been repeatedly named the world's most valuable brand, giving Apple Inc. strong pricing power. Although the prices of Apple Inc.'s flagship products are no longer consistently higher than competitors, the fees charged for cloud storage and hardware upgrades are still far above-average levels. This is a direct result of its brand strength. Secondly, Apple Inc. has an integrated ecosystem. Apple Inc. products are known for seamlessly integrating with each other, often sharing the same software and similar hardware. Users can copy and paste between their iPhones and iPads, a level of ecosystem integration that few other companies offer, proving Apple Inc. to be an excellent choice for those who want all their devices to work seamlessly. Lastly, Apple Inc. has a loyal fan base, especially in countries like the US and Japan. These fans not only contribute to Apple Inc.'s brand strength but also help promote the company's products by uploading reviews to YouTube and posting comments on Facebook. Therefore, Apple Inc.'s loyal fan base also helps attract new people to join the fan base, giving the company an enviable marketing advantage. Why the Company is not Favorable at this Price The analyst believes that Apple Inc. is a great company. However, giving it a "neutral" rating is related to the fact that the company trades at growth stock valuation multiples while facing disadvantages in sustained growth. As shown in the chart above, the stock trades at a P/E of 36, a P/S of 9.8, and an extraordinary P/B of 55. The company would need to pay back today's investment with the equivalent of its earnings for 36 years, not to mention opportunity costs. As shown in the chart above, Apple Inc.'s valuation multiples not only look high but are extremely premium compared to peer companies. Apple Inc.'s stock valuation currently seems overvalued. Indeed, if Apple Inc.'s stock cannot sustain growth, then it is currently overvalued. A P/E multiple of 36 equals a 2.77% yield. The current yield on a 10-year government bond is 4.14%. Therefore, without growth, Apple Inc. stock cannot outperform the opportunity cost of "risk-free" capital. Will Apple Inc. Really Stop Growing? It is indeed difficult to see where significant revenue growth will come from. The company's recent two large projects - the car and Vision Pro - seem to be not progressing smoothly. The company can always raise prices slightly, but this will not bring the kind of growth that achieves a 20% compound annual growth rate, as Apple Inc. did in the 2000s. Therefore, it is now conservatively estimated that Apple Inc.'s long-term revenue growth rate will not exceed the level of the past twelve months (TTM) (6.4%). While the company's profit growth may exceed this number in the short term, it is unlikely to significantly exceed it in the long run, as profit is largely a function of revenue (specifically revenue and costs). With a 6.4% long-term forward growth rate, Apple Inc. is not worth investing in at a P/E of 36. The yield at this level is only 2.77%, while investors can get a higher yield from government bonds. Conclusion The final conclusion on Apple Inc. at the end of 2025 is that it is a great company, but the trading price is not so ideal. The company should be able to maintain its customer base easily, even achieving modest percentage growth in the future. However, it will be difficult for it to achieve explosive growth as opportunities to change its situation are scarce for a giant company worth over three trillion dollars. Given this, the company's P/E multiple of 36 seems slightly high. Therefore, a "neutral" rating is maintained for Apple Inc.