Apple stock faces challenges with stagnant iPhone sales, potential loss of revenue from Google, high valuation, and rising interest rates

From Nasdaq: 2025-01-15 05:15:00

Apple stock (NASDAQ: AAPL) has soared during the pandemic, reaching a market cap over $3 trillion. However, challenges lie ahead with stagnant iPhone sales and a potential loss of a $20 billion revenue stream from Google. Valuation and rising interest rates may also impact the stock’s performance in 2025.

Apple’s iPhone revenue has remained flat, with sales declining by 5% during the holiday quarter. The company’s AI push with Apple Intelligence has not been successful, as many users see little value in the features. With iPhone sales accounting for over half of Apple’s revenue, reversing these trends will be crucial.

Apple receives over $20 billion annually from Google as part of a deal for Safari’s default search engine. However, this arrangement may be threatened as Google faces antitrust challenges. Losing this revenue could significantly impact Apple’s bottom line, representing around one-sixth of its annual operating income.

Despite challenges, Apple stock trades at a high valuation of about 38 times earnings. Rising bond yields and interest rates could make this valuation harder to justify, especially with sluggish revenue growth. With shares tripling in the past five years, a correction may be looming for Apple’s stock in the near future.

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