Down 19%, Should You Buy the Dip on Apple Stock? The Answer Might Surprise You.

Key Points

• Apple has created a powerful walled garden that keeps customers essentially locked into the company’s ecosystem.

• Investors must keep tabs on the dynamic trade situation, since Apple isn’t immune from the effects.

• Shares are having a disappointing year, but the valuation is still expensive.

• 10 stocks we like better than Apple ›

It hasn't been a good year for investors in Apple (NASDAQ: AAPL). As of July 14, shares of the consumer tech powerhouse are down 17%. Tesla is the only other "Magnificent Seven" company to have a worse performance in 2025.

Apple stock's disappointing showing this year doesn't take away from the fact that it's up 564% in the past decade. That gain is well ahead of the S&P index. But shares are trading 19% below their peak from December last year.

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Is now the time for investors to buy the dip? The answer might surprise you.

Image source: Getty Images.

Apple is one of the world's best businesses

I believe long-term investing success comes down to owning the right companies. And by this, I mean high-quality businesses that have durable competitive strengths. What's more, operating from a position of financial prowess is also a necessity.

Here's where Apple stands out. One reason this is such a great company is its brand presence. Consumers across the globe have come to love Apple's beautifully designed hardware and easy-to-use software. These are at the premium end of the spectrum, and they really resonate with people.

The ecosystem Apple has built is another reason this is a superb business. Its products only work with the company's own software and services, which creates a walled garden that makes for an exceptional experience for consumers. This also makes it difficult to switch to the offerings of competitors.

When it comes to financial strength, Apple is near the top. As of March 29, it carried $35 billion in net cash on its balance sheet. And during the latest fiscal quarter, the business generated $25 billion in net income. The risk that Apple gets into financial trouble is practically nonexistent.

Risks that are too hard to ignore

It doesn't matter how wonderful a company is; all of them must overcome challenges at some point. Apple is no different. There are three pressing issues investors need to be mindful of right now.

Growth is slowing. Revenue declined 2.8% in fiscal 2023 to $383 billion, before rising by just 2% in fiscal 2024. Over the following three fiscal years, Wall Street consensus analyst estimates call for sales to increase at a compound annual rate of 5.3%. This outlook isn't exactly bringing in growth-minded investors.

During the second quarter of 2025, 49% of total revenue came from the iPhone, a product that's 18 years into its life cycle. While this might be the most successful product of all time, its maturity these days doesn't really incentivize consumers to constantly buy the newest upgrades. To be fair, Apple's other products are incredibly popular, but it's hard to drive meaningful growth on a very high sales base.

There have been concerns that Apple's entrance into artificial intelligence (AI) has been slow. The new and improved AI-powered Siri isn't expected to be launched until 2026.

And it seems that observers are constantly hearing about new AI developments from big tech peers. For what it's worth, though, Apple's focus on the user experience and privacy are always bright spots.

Investors can't forget about the dynamic tariff situation. For a lot of its production, the company relies on China, a country that's always on top of President Donald Trump's mind when making decisions about trade policy. It also doesn't help that Apple's sheer size and visibility make it a punching bag for Trump, who criticized the company for moving more production to India.

The latest challenges are certainly worth paying attention to. However, this is still a fantastic company that should be able to navigate whatever comes its way.

But even though the stock is 19% off its record, its current price-to-earnings ratio (P/E) of 32.5 is still expensive. In fact, it's well above the trailing-10-year average. Until the P/E gets closer to 25, investors shouldn't buy Apple shares.

Should you invest $1,000 in Apple right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Tesla. The Motley Fool has a disclosure policy.