Buy, Sell or Hold the Apple Stock Post the WWDC25 Announcements?
Apple AAPL, at this year's annual Worldwide Developers Conference (WWDC), introduced a plethora of updates in its major platforms — iOS 26, iPadOS 26, macOS Tahoe 26, tvOS 26, visionOS 26 and watchOS 26 — along with a new software design crafted with a new material called Liquid Glass. The translucent material reflects and refracts its surroundings and intelligently adapts between light and dark environments. Liquid Glass makes apps and system experiences more expressive, offering users greater focus on content.
At WWDC25, the company announced new Apple Intelligence features like Live Translation, updates to visual intelligence, as well as enhancements to Image Playground and Genmoji. Shortcuts can access Apple Intelligence directly. Developers also get access to the on-device large language model, which is at the core of Apple Intelligence. The latest features are now available for testing and are expected to be generally available this fall with supported devices.
Apple is expanding Services with AutoMix and Lyrics Translation features in Apple Music. Sing will allow users to transform their iPhones into a handheld microphone for Apple TV, while preferred routes and visited places in Apple Map make navigation easier for users. Apple Intelligence is now getting added to Apple Wallet, and users can make purchases with Apple Pay. Powered by Apple Intelligence, Apple Wallet can now automatically identify, summarize and display order tracking details from emails sent from merchants or delivery carriers. Meanwhile, Apple Pay expands the ability to pay with rewards and installments to in-store purchases for added flexibility and choice.
The latest features and the Liquid Glass software design bode well for Apple's prospects, although Apple Intelligence features lacked the 'wow' factor. Apple continues to play catch-up in the AI domain against the likes of Amazon AMZN, Microsoft MSFT and Alphabet GOOGL. Apple shares have declined 19.1% year to date (YTD), underperforming the Zacks Computer & Technology sector's appreciation of 2.5%. While Microsoft shares have returned 11.8% YTD, Amazon and Alphabet dropped 0.9% and 5.6%, respectively.
Apple Stock's YTD Performance
So, what should investors do with Apple stock post the WWDC25 announcements? Let's find out.
Apple Suffers From Stiff Competition, Sluggish China Sales
Apple stock has suffered from U.S. President Donald Trump's decision to levy tariffs on trade partners, including China, Mexico and Canada. China is an important market for Apple as the iPhone maker's manufacturing is primarily concentrated in the country. Higher tariffs negatively impact Apple's China supply chain. The Trump administration's decision to exempt electronic devices like smartphones and computers from reciprocal tariffs provided some relief to Apple.
Tariffs are currently expected to have a negative impact of roughly $900 million in the third quarter of fiscal 2025. Apple expects gross margin between 45.5% and 46.5% for the current quarter. In the fiscal second quarter, Apple reported a gross margin of 47.1%.
Apple has been suffering from sluggish demand for the iPhone in China amid increasing competition from the likes of Huawei and Xiaomi, as well as the lack of Apple Intelligence. Greater China sales decreased 2.3% year over year in the second quarter of fiscal 2025.
Can Strong Services Boost Apple's Prospects?
Although Apple's business primarily revolves around its flagship iPhone, the Services portfolio has emerged as the company's strong growth driver. In the fiscal second quarter, Services revenues grew 11.6% year over year. Apple now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. The expanding content portfolio of Apple TV+, Apple Music and Apple Arcade, as well as the growing user base of Apple Pay, has helped drive subscriber growth.
Apple is seeing better iPhone 16 sales in regions where Apple Intelligence is available. Apple expanded the availability of Apple Intelligence with iOS 18.4, iPadOS 18.4, and macOS Sequoia 15.4 updates in new languages, including French, German, Italian, Portuguese (Brazil), Spanish, Japanese, Korean, and Chinese (simplified) — as well as localized English for Singapore and India — and are accessible in nearly all regions around the world. At the end of 2025, Apple Intelligence will be available in eight more languages: Danish, Dutch, Norwegian, Portuguese, Swedish, Turkish, Chinese (traditional) and Vietnamese.
AAPL Estimates Show Downward Trend, Shares Overvalued
The Zacks Consensus Estimate for Apple's fiscal 2025 earnings has declined by a penny to $7.11 per share over the past 30 days, indicating 5.33% growth from the figure reported in fiscal 2024.
The AAPL stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
Apple is trading at a forward 12-month Price/Sales (P/S) of 7.3X compared with the sector's 6.41X, Amazon's 3.19X and Alphabet's 6.39X. However, Microsoft is trading at 11.24X, a significant premium compared with Apple.
Price/Sales (F12M)
Image Source: Zacks Investment Research
AAPL shares are now trading below the 50-day and 200-day moving averages, indicating a bearish trend.
Apple Trades Below 50-day & 200-day SMAs
Conclusion
Although the Services business has emerged as AAPL's new cash cow, we believe Apple Intelligence's underwhelming performance is a headwind for its product business (iPhone, iPad and Mac). A stretched valuation is a concern for investors.
AAPL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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