It's Time to Sell Apple Stock. Here's Why.

Source The Motley Fool

While many people still own Apple (NASDAQ: AAPL) stock, I think it's time to let it go. The stock has been a stellar performer over the past decade, but all of its recent gains have been due to investors bidding up the stock, rather than actual business performance.

Apple produced some very lackluster quarters for the past three years, and there's no indication of any growth on the horizon. As a result, it's only a matter of time before the market corrects itself and sends Apple to a more reasonable price level.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

iPhone sales haven't really done much over the past five years

Apple needs no introduction. It's one of the most popular tech brands globally, but especially in the U.S. The product ecosystem it built is second to none and captured many users.

However, Apple seems to be behind in one of the most important technological races yet: artificial intelligence. A large chunk of Apple's revenue comes from iPhones, and its AI feature, Apple Intelligence, leaves a lot to be desired compared to its Android competitors. This was evident in its first-quarter fiscal year 2025, which ended on Dec. 28, 2024. Apple's Q1 encompasses the all-important holiday quarter, when most iPhones are sold. If iPhone sales spiked in Q1, then it's clear that the latest launch was successful. If they stayed flat, then it's evident that the phone didn't bring anything new to the table.

Using this measure, it's safe to say Apple really hasn't moved the needle in some time.

Year iPhone Revenue
2024 $69.1 billion
2023 $69.7 billion
2022 $65.8 billion
2021 $71.6 billion
2020 $65.6 billion

Data source: Apple.

Over a five-year span, Apple's iPhone revenue really hasn't gone anywhere. This gets even worse when you factor in inflation, as the $65.6 billion in iPhone sales during the holiday quarter in 2020 is equivalent to $79.5 billion in 2024 dollars.

So, on an inflation-adjusted basis, iPhone sales are down over the last five years. With iPhone sales making up 56% of sales, this isn't a good sign for Apple.

Overall, Apple's revenue increased 4% year over year, but thanks to efficiency improvements, its earnings per share (EPS) rose 10%. This shows that even though Apple has no growth, management is doing a great job maximizing its profitability.

However, that kind of growth is essentially market-average, so the stock should trade at around what the broader market does.

Apple's stock has a premium valuation

While Apple's financial performance is essentially market-average, its stock is valued like that of the next biggest growth company.

Apple stock trades for a whopping 36 times trailing earnings and 31 times forward earnings.

AAPL PE Ratio Chart

AAPL PE Ratio data by YCharts. PE = price-to-earnings.

Compared to the S&P 500, which trades for 25.5 times trailing earnings and 22.3 times forward earnings, Apple has a premium of around 40% compared to the market.

Now, I'll buy the notion that Apple should command a premium due to its incredible brand value, but 40% is far too high a premium for just brand value.

There are far more attractive investments than Apple, as multiple companies trade for a cheaper price tag and have stronger growth than Apple. Here are just a few:

Company Forward P/E Last Quarter Diluted EPS Growth
Nvidia 26.2 111%
Taiwan Semiconductor 22.2 54%
Meta Platforms 27.6 52%
Salesforce 30.2 35%
Alphabet
22.4 21%
ASML
29.4 30%

Data source: YCharts.

All of these are far more attractive investment options than Apple and represent growth at a reasonable price.

As a final closing point, if you own an S&P 500 index fund, then you already have nearly 7% of the fund in Apple stock. That's a significant weighting already, and further exposure to a company that's not putting up spectacular results isn't a wise investment strategy.

There are far too many other promising companies out there to waste time with Apple as an individual holding. As a result, I think it's time to move on from Apple stock and focus on more promising areas.

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

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $765,024!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

Learn more »

*Stock Advisor returns as of February 3, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in ASML, Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Alphabet, Apple, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
U.S. Vice President JD Vance among Bitcoin 2025 Conference speakersThe Bitcoin 2025 Conference organizers, BTC Inc., unveiled the list of featured speakers at this year's event in Las Vegas, and U.S. VP JD Vance is at the top among them.
Author  Cryptopolitan
May 26, Mon
The Bitcoin 2025 Conference organizers, BTC Inc., unveiled the list of featured speakers at this year's event in Las Vegas, and U.S. VP JD Vance is at the top among them.
placeholder
Ethereum Price Faces Pressure: Can It Sustain Its Recent Rally?Ethereum price found support at $2,460 and started a fresh increase. ETH is now struggling and might drop again below the $2,500 support.
Author  NewsBTC
23 hours ago
Ethereum price found support at $2,460 and started a fresh increase. ETH is now struggling and might drop again below the $2,500 support.
placeholder
Japan loses top global creditor spot to GermanyJapan lost its 34-year reign as the world’s largest creditor nation to Germany at the end of 2024.
Author  Cryptopolitan
21 hours ago
Japan lost its 34-year reign as the world’s largest creditor nation to Germany at the end of 2024.
placeholder
Gold extends correction amidst trade optimism, stronger US DollarGold (XAU/USD) price extends correction, sliding below the $3,300 mark at the time of writing on Tuesday amid improving risk-on mood and a stronger US Dollar (USD). 
Author  FXStreet
18 hours ago
Gold (XAU/USD) price extends correction, sliding below the $3,300 mark at the time of writing on Tuesday amid improving risk-on mood and a stronger US Dollar (USD). 
placeholder
EUR/JPY appreciates above 163.00 with the Yen retreating across the boardThe Euro is trading higher for the second consecutive day, still fuelled by the delay of Trump’s deadline to avoid 50% tariffs in the US, while the Yen declines alongside super long-term Japanese yields.
Author  FXStreet
17 hours ago
The Euro is trading higher for the second consecutive day, still fuelled by the delay of Trump’s deadline to avoid 50% tariffs in the US, while the Yen declines alongside super long-term Japanese yields.
goTop
quote