Apple AAPL shares closed at $297.84 on Monday, close to a 52-week high of $303.20 it hit on May 15, rising 9.6% year to date (YTD). Since reporting second-quarter fiscal 2026 on April 30, Apple shares have returned 9.8%, outperforming the broader Zacks Computer and Technology sector’s return of 5.6%. The shares have benefited from…
Apple AAPL shares closed at $297.84 on Monday, close to a 52-week high of $303.20 it hit on May 15, rising 9.6% year to date (YTD). Since reporting second-quarter fiscal 2026 on April 30, Apple shares have returned 9.8%, outperforming the broader Zacks Computer and Technology sector’s return of 5.6%. The shares have benefited from strong 22% year-over-year growth in iPhone sales and 16% growth in Services revenues, which was an all-time record in Apple’s history.
Although robust iPhone demand and an expanding installed base of devices are expected to boost the Services business, stiff competition from Chinese OEM smartphone vendors, as well as Alphabet, HP HPQ, Dell Technologies DELL and Microsoft MSFT in the PC and artificial intelligence (AI) domain. Apple’s prospects have suffered from issues with its AI initiatives due to the postponement of several features, which has been a concern for investors. YTD, Apple has underperformed Dell Technologies, shares of which have surged 89.1%, but outperformed HP and Microsoft, shares of which have dropped 6.1% and 12.4%, respectively. So, what should investors do with the AAPL stock? Let’s dig deep to find out.
Apple Stock’s Price Performance
Zacks Investment Research
Image Source: Zacks Investment Research
Apple Suffers From Stiff Competition, AI Delays
AAPL is facing stiff competition from the likes of Lenovo, Dell Technologies and HP in the PC domain. Per Gartner, worldwide PC shipments totaled 62.8 million units in the first quarter of 2026, up 4% year over year. Lenovo led with 26.5% market share, trailed by HP and Dell Technologies with 19.3% and 16.5%, respectively. Apple had a 10.6% market share.
The smartphone segment is chock-a-block with competition from Chinese vendors, as well as Samsung and Google Pixel. Per Counterpoint’s latest data, global smartphone shipments declined 6% year over year in the first quarter of 2026, with Apple leading with 21% market share and shipments growing 5% year over year, driven by strong iPhone 17 demand and improved performance in China. Samsung’s shipments declined 6% year over year with 20% market share.
In the Services business, Apple faces competition from multiple providers, including Amazon and Alphabet’s Google, across various services, including Apple Pay, gaming and Apple Music. In streaming, Apple has a minuscule market share compared with Amazon Prime Video and Netflix.
Stiff competition along with multiple delays in the launch of Apple Intelligence features, as well as Siri upgrades, has been a concern for the iPhone-maker. The company’s privacy-first policy has been detrimental in driving data collection initiatives that slowed down AI model training. Apple has been a late entrant into the generative AI race compared with Alphabet and Microsoft, and is still playing catch-up. However, Apple’s multi-year collaboration deal with Google is now expected to be a key catalyst in boosting Apple Intelligence features.
Apple Shares Are Overvalued
Apple shares are overvalued, as suggested by a Value Score of F. The stock is trading at a forward 12-month price/earnings (P/E) of 32.2X compared with the broader Zacks Computer & Technology sector’s 25.48X.
Apple shares are trading at a premium compared with peers, including HP, Microsoft and Amazon. Shares of HP, Microsoft and Dell Technologies are trading at a P/E multiple of 7.28, 22.21 and 17.87, respectively.
Apple Stock’s Valuation
Zacks Investment Research
Image Source: Zacks Investment Research
Can Apple Stock Ride on an Expanding Portfolio?
Strong iPhone 17 sales are expected to help Apple’s top-line grow in fiscal 2026. The company has been adding features to the iPhone line-up, including Apple Intelligence tools, which are driving iPhone sales. Apple has also called out iPhone Air as its slimmest and lightest smartphone, while iPhone 17 was positioned as a strong-value upgrade.
Apple expanded its MacBook portfolio with the launch of MacBook Air and MacBook Pro. The introduction of M5 Pro and M5 Max chips, built using a new Apple-designed Fusion Architecture, which connects two dies into a single SoC, boosts performance. The new MacBook Air is powered by the latest M5, which features a faster CPU and next-generation GPU with a Neural Accelerator in each core. The 14-inch and 16-inch MacBook Pro, powered by M5 Pro and M5 Max, adds superior performance and AI capabilities. The latest MacBook Neo is gaining traction among enterprise and education clientele.
Apple’s Services segment benefits from an expanding games portfolio and the growing popularity of Apple TV+. Apple’s strategy of adding new games on a continuous basis is driving its user base. The Services have been benefiting from frequent updates, thereby driving the user base.
The Zacks Consensus Estimate for Apple’s fiscal 2026 earnings has increased 3% to $8.74 per share over the past 30 days, indicating 17.2% growth from the figure reported in fiscal 2025.
Apple Inc. Price and Consensus
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
The Zacks Consensus Estimate for Apple’s fiscal 2026 revenues is pegged at $477.94 billion, indicating 14.8% growth over the figure reported in fiscal 2025.
Conclusion
Apple’s prospects are expected to benefit from its strong iPhone and Services business. Apple’s expanding AI footprint, thanks to the GOOGL collaboration, bodes well for long-term prospects. However, stiff competition in the smartphone, PC and AI domains, along with a stretched valuation, is expected to remain an overhang on the stock in the near term, limiting further upside from the 52-week high.
AAPL currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to enter the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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