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Apple (AAPL) has consistently redefined the consumer electronics industry. Its integrated ecosystem — which includes the iPhone, Mac, Apple Watch, and services like iCloud and Apple Music —delivers a smooth, interconnected experience that strengthens customer loyalty. Over the past decade, Apple’s stock has achieved a remarkable return of 663.6%.
Recent product launches, like the Vision Pro mixed-reality headset, highlight that innovation remains central to Apple’s growth strategy. Last year, AAPL stock surged 34.9%, outperforming the broader market’s 24% gain and the Nasdaq Composite Index’s ($NASX) 30.7% rise.
However, the company has struggled to deliver major updates to its iPhone lineup, which remains its largest revenue driver. Last year, the company introduced the hotly anticipated iPhone 16 Pro and iPhone 16 Pro Max, powered by Apple Intelligence. While preorders indicated strong demand, the full revenue impact of these new iPhones will become clear when Apple reports its first-quarter fiscal 2025 results on Jan. 30. Let’s find out if Apple stock is a buy ahead of earnings.
How Was Fiscal 2024 for Apple?
Apple’s powerful brand and diversified revenue streams provide it with resilience during economic downturns. Its focus on premium products enables the company to retain pricing power even in tough economic conditions. Apple achieved modest growth throughout fiscal 2024. In the most recent fourth quarter of fiscal 2024, revenue grew by 6% to $94.9 billion, with earnings rising 12% year-over-year. iPhone sales alone reached $46.2 billion, marking a 5.5% year-over-year increase. During the Q4 earnings call, management noted a Kantar survey naming the iPhone as the top-selling model in markets such as the U.S., urban China, the U.K., Australia, and Japan. For the full fiscal year, total revenue increased by 2% to $391 billion.
In addition to the iPhone 16 series, Apple introduced the Apple Watch Series 10 and AirPods 4 during the September quarter. Following the launch, Citi analyst Atif Malik praised the AI-powered iPhones and predicted that the upcoming iPhone 17 launch in 2025 would be a significant upgrade. Malik estimates Apple will sell “85 million iPhone 16 units in 2024 and 92 million iPhone 17 units in 2025.” Similarly, Wedbush analyst Dan Ives predicts that the iPhone 16 launch could drive Apple’s market capitalization from its current $3.36 trillion to $4 trillion by 2025.
On the financial front, Apple maintains a strong liquidity position despite ongoing investments in product upgrades. During the quarter, the company paid off $2.6 billion in maturing debt, closing with $107 billion in total debt and $157 billion in cash, cash equivalents, and marketable securities.
Apple’s dividends provide stability for income-focused investors, supported by its robust free cash flow. In the fourth quarter, the company returned $3.8 billion through dividends and $25 billion through share repurchases. Apple has raised its dividends for 13 consecutive years, including a 4% increase to $0.25 per share in Q2 of fiscal 2024. With a forward payout ratio of 12.1%, Apple has ample capacity for future dividend hikes. Although its current dividend yield of 0.41% is below the tech sector average of 1.4%, the combination of consistent dividend growth and aggressive share buybacks offers a compelling total return opportunity for investors.
What’s in Store for Q1 2025?
Management anticipates double-digit growth in service revenue for the first quarter of fiscal 2025. However, considering the broader macroeconomic environment, total revenue is projected to grow in the low to mid-single digits, with a gross margin expected to range between 46% and 47%. Analysts estimate Apple’s first-quarter fiscal 2025 revenue at approximately $124.09 billion, representing a 3.7% year-over-year increase, with earnings projected at $2.35 per share, reflecting a 7.8% rise. Looking ahead, analysts forecast Apple’s revenue to grow by 5.7% in fiscal 2025, reaching $413.3 billion, with an additional 8.04% increase projected for fiscal 2026. Earnings are expected to climb by 9.2% in 2024 to $7.30 per share, followed by a 12.1% increase in 2025, driven by the launch of the new AI-powered iPhone 17.
What Does Wall Street Say About Apple Stock?
Recently, Goldman Sachs analyst Mike Ng reaffirmed his “Buy” rating for AAPL, setting a price target of $280. Ng anticipates that upcoming product launches and growth in Apple’s services segment will boost the company’s performance in the coming quarters. Morgan Stanley analyst Erik Woodring expressed a similar sentiment, maintaining his positive outlook. He highlighted that, despite short-term macroeconomic challenges, Apple is expected to demonstrate resilience through fiscal 2025 and beyond.
On Wall Street, Apple stock holds a “Moderate Buy” consensus rating. Among the 36 analysts covering the stock, 17 recommend a “Strong Buy,” five rate it a “Moderate Buy,” 10 suggest a “Hold,” one advises a “Moderate Sell,” and three rate it a “Strong Sell.” With an average price target of $243.31, analysts project potential upside of approximately 8.7% over the next 12 months. The highest price target is $325, indicating the stock could rise as much as 45.3% from current levels.
At 30x forward 2025 earnings, Apple stock appears expensive. However, its earnings growth, substantial cash flow, and shareholder returns highlight the company’s ability to navigate evolving technological trends. While Apple’s brand loyalty and ecosystem give it a competitive edge, maintaining market share in the face of aggressive competition requires constant innovation. The company’s long-term growth outlook remains solid, driven by its thirst for innovation, entry into new markets, and the expanding services segment, making it an attractive investment opportunity.
