Apple Faces Tariff Risks, Ai Setbacks And Slowing Growth - What's Next?

The iPhone maker has tumbled in recent sessions, extending its year-to-date underperformance amid a growing number of risks that are overshadowing its traditional high-quality characteristics.

While Apple offers steady earnings growth and sits on a mountain of cash, headwinds form a daunting list for would-be bulls: it is heavily exposed to tariff uncertainty and China, its artificial intelligence offerings have repeatedly fizzled and its lucrative partnership with Google is potentially at risk. It trades at a premium to megacap tech peers despite slower revenue growth, suggesting that the haven case is harder to make for Apple.

"People like to park in Apple, but right now the stock is expensive, and not only is growth slow, but the catalysts for growth are absent," said Tim Ghriskey, senior portfolio strategist at Ingalls Snyder. "It doesn't seem like AI is doing much for it, the environment is very uncertain, and it is very at risk with tariffs and China. While it isn't as controversial as Tesla, it seems like it is just treading water and it has been a while since we've seen anything truly innovative from it."

Revenue has fallen in five of the past nine quarters, and while analysts expect 4.7 growth in fiscal 2025, this is less than half the 11.8 pace expected for the overall tech sector. This is despite Apple trading at 28x estimated earnings, well above its 10-year average, and a premium to every other Magnificent Seven stock except Tesla.

"There's so much uncertainty from tariffs, and doubts that it can grow enough to overcome both risks like that and the valuation hurdle," said Scott Yuschak, MD of equity strategy at Truist Advisory Services. "It isn't the stock I'll worry about first, since its balance sheet is stable and there are other pricey stocks where the businesses aren't as durable, but I do wrestle with it."