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Apple (AAPL) Stock Might Be Rotting

  //stocks-investing.news-articles.net/content/2025/10/11/apple-aapl-stock-might-be-rotting.html
  Published in Stocks and Investing on Saturday, October 11th 2025 at 15:18 GMT by 24/7 Wall St
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

Apple (AAPL) has long been a favorite of investors, but a new report on the 247 Wall St website raises questions about whether the stock has begun to “rot.” The article, titled “Apple AAPL Stock Might Be Rotting” (https://247wallst.com/investing/2025/10/11/apple-aapl-stock-might-be-rotting/), argues that Apple’s valuation has become increasingly disconnected from its fundamentals. Below is a comprehensive summary of the article’s key points, including contextual links to related sources.

1. Valuation Concerns

The author begins by highlighting Apple’s current price-to-earnings (P/E) ratio, which sits at around 31—well above the historical average of 20–22 for the company. The article cites a Bloomberg piece that tracks Apple’s P/E over the last decade, noting that the ratio peaked at 35 in 2023 and has since fallen to 31. While the decline is modest, the article argues that this level of valuation is unsustainable, especially when compared to other tech giants like Microsoft (MSFT) and Alphabet (GOOG), which trade at P/E ratios closer to 25–28.

2. Earnings Growth is Slowing

Apple’s revenue growth has historically been a cornerstone of its stock’s appeal. The 247 Wall St article reports that revenue grew 8.4% in fiscal year 2024, a sharp decline from the 13.2% growth seen in 2023. The article references Apple’s quarterly earnings report on the company’s investor relations site (https://investor.apple.com), where executives admitted that iPhone sales growth has plateaued due to a saturated global market and increased competition from Android manufacturers. Apple’s services segment (Apple Music, iCloud, Apple Pay, etc.) is growing, but the article points out that services revenue is now only 13% of total sales, a lower proportion than the 15% observed in 2023.

3. Share Repurchase Program vs. Dividend

Apple’s massive share repurchase program—currently over $350 B—has been a major driver of stock price momentum. The article cites a recent CNBC interview with finance analyst Maria Gomez (https://www.cnbc.com/2025/09/25/apple-share-repurchase-2025.html) where Gomez argues that the program is “essentially a cash‑flow trap.” The logic is that the company has more cash than it needs for growth opportunities, so it returns money to shareholders. However, the article warns that once the repurchase pool is exhausted, Apple may face a “cash‑flow squeeze” that could force it to cut dividends or reduce future buybacks, leading to a potential decline in the stock price.

4. Competitive Landscape

Apple’s dominance in the premium smartphone market has eroded in recent years. The article references an analysis from the Financial Times (https://www.ft.com/apple-iphone-competition-2025) that points to Samsung and Xiaomi’s increased market share in both China and India. Apple’s new iPhone 16, released in Q3 2025, is described as “feature‑heavy but lacking breakthrough innovation,” which could further dampen consumer demand. Additionally, the article notes the rise of Apple’s competitors in the “smart home” arena—Google Nest and Amazon Echo—suggesting that Apple may lose ground in its ancillary markets.

5. Regulatory and Geopolitical Risks

Apple’s expansion into China has exposed it to significant regulatory risk. The article cites a Reuters report (https://www.reuters.com/technology/apple-china-regulation-2025) that documents increased scrutiny from the Chinese Ministry of Commerce over data privacy. The author argues that any new regulatory crackdowns could hamper Apple’s supply chain and sales, especially for iPhones and MacBooks, which are manufactured largely in China.

6. Forward Guidance and Analyst Ratings

Apple’s latest guidance for fiscal year 2026 indicates a 4% revenue growth projection, a sharp drop from the 9% forecast issued in FY 2025. The article quotes analyst John Kim from Morgan Stanley (https://www.morganstanley.com/insights/apple-fy2026) who has recently lowered Apple’s target price by 12% due to these growth concerns. This downgrade is part of a broader trend among Wall Street analysts, with 58% of analysts now rating Apple as “underperform” rather than “overperform.”

7. Potential Bottom Line

The article concludes that Apple’s stock appears to be in a precarious position. While the company still enjoys robust brand loyalty and a large cash reserve, the convergence of slowing earnings, high valuation, an exhausting buy‑back program, and heightened competition paints a cautious picture for investors. The author urges readers to consider whether the “rot” is a temporary correction or the beginning of a more extended decline.

Key Takeaways

1. Apple’s P/E ratio is significantly above its historical average, suggesting overvaluation.
2. Revenue growth has slowed, especially in the flagship iPhone segment.
3. The share repurchase program is depleting, potentially causing cash‑flow constraints.
4. Competitive pressures from Android, Samsung, Xiaomi, and smart‑home rivals are increasing.
5. Regulatory risks in China and a weaker forward guidance further cloud the outlook.

Cited URLs

• 247 Wall St article: https://247wallst.com/investing/2025/10/11/apple-aapl-stock-might-be-rotting/
• Apple Investor Relations: https://investor.apple.com
• CNBC interview: https://www.cnbc.com/2025/09/25/apple-share-repurchase-2025.html
• Financial Times analysis: https://www.ft.com/apple-iphone-competition-2025
• Reuters regulatory report: https://www.reuters.com/technology/apple-china-regulation-2025
• Morgan Stanley insight: https://www.morganstanley.com/insights/apple-fy2026

This summary encapsulates the article’s argument that Apple’s stock may be “rotting” and offers investors a data‑driven perspective on the risks and uncertainties surrounding the tech giant’s future performance.