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Apple’s (AAPL) latest MacBook Air launch should have been another homerun, with its new laptops boasting powerful M4 chips, sharper cameras, and up to 18 hours of battery life. But this time, the celebration comes with an asterisk.
A fresh wave of U.S. tariffs just hit, threatening to push electronics prices higher. Instead of hiking costs, Apple did the unexpected, cutting MacBook Air prices by $100, with the 13-inch model now at $999 and the 15-inch at $1,099.
With shifting supply chains, tariffs, and fierce competition, is the price cut a strategic play or a defensive move? Plus, with AAPL stock down about 9.8% YTD, is it a chance for investors to buy the dip in AAPL stock?
About Apple Stock
California-based Apple (AAPL) commands a market cap of nearly $3.6 trillion. Its seamless ecosystem of hardware, software, and services fuels fierce customer loyalty.
Shares are up 32.3% over the past 52 weeks, outpeforming the S&P 500 Index ($SPX). However, down nearly 10% in the year-to-date, it is underperforming the benchmark index.
In terms of valuation, AAPL is priced at 32.4 times forward earnings and 9.04 times sales, trading well above the sector averages of 27.74x and 3x, respectively. Despite its premium valuation, Apple’s dominance keeps the market hooked, reinforcing its status as a long-term growth powerhouse.
Apple’s Q1 Beats Wall Street Projections
The curtains on Apple’s fiscal 2025 first-quarter results were lifted on Jan. 30, and the tech giant delivered yet another show-stopping performance. The iPhone maker unveiled record-breaking revenue of $124.3 billion, narrowly surpassing Wall Street’s expectations and marking 4% annual growth. Apple once again proved its dominance, with products generating nearly $98 billion in revenue, driven by iPad and Mac growth, while its services division soared 14% to a record $26.3 billion.
Meanwhile, Apple’s financial strength was evident in its all-time high net income of $36.3 billion and EPS of $2.40, beating analysts’ predictions of $2.36. A strong product mix helped push gross margins to 46.9%, reinforcing the company’s operational efficiency. Meanwhile, operating cash flow stood at an impressive $29.9 billion, underscoring Apple’s financial resilience.
While Apple remained tight-lipped on precise future earnings, it signaled optimism, forecasting low- to mid-single-digit revenue growth for the March quarter and double-digit expansion in services. Looking ahead, innovation remains Apple’s north star. With the continued rollout of Apple Intelligence, the company is poised to redefine user experiences, ensuring that its ecosystem remains indispensable in the digital age.
Meanwhile, analysts tracking the company are eyeing a healthy 7.7% year-over-year boost in earnings for fiscal 2025, projecting $7.27 per share.
Apple’s Price Cut Amid Tariffs
Apple is playing a high-stakes game with tariffs looming over the tech sector. Just as U.S. duties threaten to push costs higher, Apple slashed MacBook Air prices, while rivals like Acer are already passing the burden to consumers. Bank of America’s analysts warn that tariffs on Chinese-made products typically get passed to consumers, making Apple’s price cut an unusual twist.
With sales still below pandemic highs, Apple is betting that affordability will keep demand strong. By holding the line on pricing, the company is absorbing costs instead of offloading them onto buyers, an aggressive move to defend market share.
However, Apple’s deep ties to Chinese manufacturing remain a liability. CEO Tim Cook recently met with President Donald Trump to discuss the company’s tariff exposure, though no clear solution emerged. Meanwhile, Apple is quietly expanding production in Malaysia and Vietnam, possibly a hedge against future trade volatility.
The next few quarters will tell whether the price cut is a strategic power move to maintain dominance or a sign that Apple is bracing for turbulence.
What Do Analysts Expect for Apple Stock?
Last week, Goldman Sachs reaffirmed its “Buy” rating on AAPL with a $294 target, citing new Mac and iPad launches as growth catalysts. Despite price cuts, Apple’s MacBook Air benefits from a PC refresh cycle and AI-driven M4 chips, strengthening its market position. Analysts believe Apple’s aggressive pricing and AI-driven upgrades will fuel Mac growth, supporting its fiscal Q2 outlook of low- to mid-single-digit revenue expansion. Goldman remains bullish on Apple’s long-term positioning in the tech space.
AAPL stock has a consensus “Moderate Buy” rating overall. Of the 36 analysts covering the stock, 17 advise a “Strong Buy,” five suggest a “Moderate Buy,” 10 play it safe with a “Hold” rating, one says it's a “Moderate Sell,” and the remaining three analyst has a “Strong Sell.”
Meanwhile, the tech stock’s mean price target of $251.51 suggests that it could rally nearly 11% from the current prices. The street-high of $325, set by Wedbush’s Dan Ives, implies potential upside of 43%.
