Is Apple Stock a Buy Right Now?
Key Points
Apple has stayed out of the AI spending boom, which has supported its ability to generate robust free cash flow.
The "Magnificent Seven" stock’s valuation is historically expensive.
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Apple's (NASDAQ: AAPL) measured approach to artificial intelligence (AI), avoiding spending massive amounts of capital in this area like its big tech peers, appears to be a winning strategy from the market's point of view. Shares have climbed 22% in 2026 (as of July 20). They trade in record territory.
Should investors buy this "Magnificent Seven" stock right now?
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Investors might want to think twice about purchasing this business. That's because Apple shares aren't cheap.
The current price-to-earnings ratio of 39.5, which is near an 18-year high, indicates heightened investor enthusiasm. This adds greater downside risk should the business report financial results that disappoint investors.
The market clearly has a favorable view of this company, though. Apple's financial performance has been superb. It reported 16.6% year-over-year revenue growth in Q2 2026 (ended March 28), with diluted earnings per share rising 21.8%. Demand for the latest iPhone 17 family has been off the charts, supporting the powerful ecosystem that drives customer stickiness.
Perhaps most importantly, Apple has stayed away from the unprecedented capital expenditure (capex) cycle that's defining the AI boom. Its capex totaled just $4.3 billion in the first six months of fiscal 2026.
Consequently, free cash flow remains robust. This gives the leadership team the ability to continue returning incredible amounts of capital to shareholders, primarily through stock buybacks.
Investors should keep Apple on their watch list, but wait for a better valuation.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
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