Putting valuations on publicly traded companies is tricky because so much is tied to stock prices — and stock prices are influenced by many things a company can’t control, such as the economy, the regulatory environment and consumer tastes. But when a company ranks as the most valuable in the world — like Apple (AAPL) — you can be sure it’s done a lot of things right.
According to recent data from The Motley Fool, Apple ranks as the largest company by market cap, with a capitalization of $3.68 trillion as of Jan. 6, 2025. That put it ahead of No. 2 Nvidia (NVDA) at $3.54 trillion. Apple has held the title of most valuable company for a long time, having first attained it in August 2011.
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Like a lot of companies’ stock prices, Apple’s stock price rose sharply in 2024 and hit a record high of $260.10 on Dec. 26. Also like a lot of stocks, Apple shares have since retreated. They closed at $228.26 on Jan. 16 — down 4% from the previous day’s close and 12% off their December high.
So is Apple stock overvalued right now? Read on to find out.
Also see five stocks to buy if you already own Apple.
Is Apple Overvalued?
The question for investors is whether Apple is overvalued right now. You’ll find mixed signals on this question. Of 36 broker recommendations recently analyzed by Zacks, half rate Apple’s stock a “Strong Buy,” five rate it a “Buy,” 10 rate it a “Hold” and three rate it a “Strong Sell.” The average price target is $243.22, which means most analysts expect Apple’s stock to push higher moving forward.
But there are also signs of weakness. As previously reported by GOBankingRates, Warren Buffett-led Berkshire Hathaway has sold a lot of Apple shares over the past couple of years. Through the third quarter of 2024, Berkshire had reduced its position in Apple by roughly two-thirds. That followed Berkshire selling 10 million shares of Apple in the fourth quarter of 2023.
Meanwhile, Apple’s stock took a hit recently after data from research firm Canalys found that the iPhone maker is “losing dominance” in China, StockStory reported. According to that report, iPhone shipments in China declined 17% to 42.9 million units in 2024, which pushed Apple down to No. 3 in market share.
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Edward Corona, a Florida-based trader and publisher of The Options Oracle Newsletter, told GOBankingRates that Apple has been in “a bit of a rough patch lately” and is “sitting close to a key support level” around $214.
“Overall, it seems like the momentum is cooling off, so I’d approach cautiously for now,” Corona said. “Now, about valuation — Apple’s P/E ratio is sitting at 39. That’s pretty high, especially compared to others in the sector, so it feels like the stock might be a little overvalued at these levels. Plus, with earnings coming up at the end of January, there’s always a chance for surprises (good or bad), so the short-term risk is definitely something to consider.”
Some market watchers have been sounding the alarm about Apple’s valuation for several weeks. In a Dec. 16 article, Guru Focus called Apple’s stock “undoubtedly overvalued at the current price,” which at the time was about $251 a share. Among other things, GuruFocus said Apple’s gross margin is “unsustainable” and that artificial intelligence won’t likely be a game changer for the iPhone when compared with the 5G upgrade.
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This article originally appeared on GOBankingRates.com: Apple Is the Most Valuable Company on Earth — Does That Mean Its Stock Is Overvalued?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
