5 Reasons I Still Love Apple Stock, Even After It Soared Higher

Apple's revenue reaccelerated through fiscal 2025 with quarterly year‑over‑year growth of 4%, 5%, 0% and 8%, lifting full‑year growth to over 6% (vs. ~2% in fiscal 2024), driven by both hardware and a services business that grew 15% in Q4 and accounted for ~30% of revenue. The iPhone 17 cycle produced double‑digit iPhone revenue in Q3 and further growth in Q4, and management guided revenue growth of 10%–12% for the December quarter with double‑digit iPhone growth expected; Apple is also investing in AI and R&D that could spur another upgrade cycle. The shares trade at roughly 32x forward earnings, reflecting a premium tied to services margins and AI potential, but risks to iPhone demand, services growth, or AI execution could pressure that multiple.

Analysis

Winners are Apple (AAPL) and high-margin software/credit partners tied to its services mix; losers include low-margin handset OEMs and component suppliers who don’t capture services revenue. The reaccelerating iPhone cycle plus ~30% revenue from services consolidates Apple’s pricing power in premium devices, likely compressing gross-margin volatility vs. peers over 3–12 months and enabling 2–4% incremental ASP leverage per iPhone cycle if services retention holds.

Tail risks include regulatory action on App Store fees, a China demand shock, or AI/feature execution failure that could drive a >15% EPS re-rating within 6–12 months; short-term risk is event-driven (days–weeks) around the December quarter print and December guidance cadence. Hidden dependencies: services growth hinges on active installed base and engagement — a 2–3ppt slip in monthly active users would materially reduce recurring revenue visibility over 4–8 quarters.

Trade implications favor owning AAPL convexity into near-term catalysts (Dec quarter, CES/WWDC AI announcements) while hedging earnings risk; implied vols are typically depressed post-earnings, so buy-dated call spreads (3–6 months) to capture upside and construct cheap protective put spreads to limit downside. Sector rotation: overweight global tech/software (+3–5% weight) and underweight smartphone component suppliers (-2–3%) over the next 3–12 months as services carry compounds valuation premiums.

Contrarian: consensus prices sustained premium (32x forward) into an AI upside that may be binary — either meaningful monetization in 12–24 months or multiple compression back toward 20–24x. History shows upgrade-cycle-driven multiples can revert quickly; if services growth decelerates to <8% YoY or iPhone units decline >5% YoY, re-rating risk is immediate and should be front-run with hedges.

Key Decisions for Investors

• Establish a 2–3% long position in AAPL within 2 weeks (buy shares) targeting 12–18% upside over 3–6 months if December-quarter revenue growth prints inside management’s 10–12% guide; size stop-loss at -8% absolute or sell on services growth <10% YoY in the print.
• Buy a defined-risk bullish call spread on AAPL for near-term convexity: purchase a 3–6 month 5–12% OTM call spread (e.g., buy 1 5% OTM call / sell 1 12% OTM call) sized to represent 1% portfolio risk to capture post-guidance rally while limiting premium paid.
• Construct a protective hedge: buy a 3-month AAPL 8–10% OTM put spread sized to cover 50–75% of the long position cost if the December quarter misses (cost target <1% of portfolio) or implement a collar if holding stock longer term.
• Implement a 3–12 month pair trade: go long AAPL (2%) and short Samsung (005930.KS) or Xiaomi (1810.HK) (2%) to express services/ASP resilience vs. low-margin handset competition; unwind if Apple global smartphone share drops >2 percentage points or services revenue growth reaccelerates above 18%.