Apple Stock (AAPL) Bulls Shaken to Their Core by Tariffs & AI Setbacks

Things haven’t been business as usual this year in Cupertino. The Big Tech giant Apple (AAPL) has faced significant headwinds over the past few months, making it the second-worst performer in the Mag 7 group—only Tesla (TSLA) has fared worse—and trailing the broader market with a ~14% decline year-to-date.

The combination of a trade war directly impacting Apple’s global supply chains, a sense that it’s lagging behind its peers in AI, and valuations that are still not cheap enough has weighed heavily on sentiment. All of this has compelled the market to take an unusual step for Apple: revise its long-term projections downward.

So far, Apple hasn’t shown any real signs of turning this around—whether through ramped-up R&D, significant AI-focused acquisitions, or clearer plans to offset tariff risks. That’s why I don’t think now is the time to play hero and load up on Apple stock. For now, I am Neutral on AAPL stock.

Two Big Drags on AAPL Stock Mobility

I see two main things weighing on Apple stock this year: AI and tariffs.

Starting with tariffs, since Liberation Day, when Apple was trading at around $172 a share, the company has faced growing pressure from U.S. political leaders to cut its dependence on China for iPhone production. Currently, approximately one-third of Apple’s largest global suppliers are still based in mainland China. Recent supply chain checks indicate that Apple could ramp up production in India to handle approximately 65% of iPhone 17 output if needed, which is impressive, given the complexity of Apple’s supply chain.

However, that’s also why the idea of manufacturing iPhones in the U.S. in any meaningful way remains unrealistic. The costs and time involved would be massive, which is why analysts like Wedbush’s Dan Ives call it a “fairy tale” unless people want to pay $3,500 for an iPhone.

The second issue is AI. Apple’s underperformance compared to other major tech companies in the AI boom has been quite noticeable. Tim Cook & Co. have been much slower—and way more cautious—than Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta (META), or Nvidia (NVDA) when it comes to rolling out big, flashy AI products.

While Microsoft has integrated OpenAI’s technology deeply into Windows, Office, and Azure, and Alphabet has aggressively promoted Gemini and other general AI models, Apple has remained quiet on large foundational models. Instead, it’s focused more on private, on-device AI features, such as improving Siri, which, honestly, just isn’t as exciting (or profitable) as giant cloud models and advanced chatbots.

M&A Could Become Apple’s Game-Changer

If the mix of tariffs hurting profitability and potentially dampening demand wasn’t enough, the market’s also starting to see the gap widen as AI becomes an even bigger moat for Apple’s competitors. The fear is that if Apple doesn’t push harder—whether by ramping up R&D or making bold M&A moves (like buying an AI startup)—it risks getting left behind and missing the transformational wave that could help offset major tariff concerns down the line, especially since Services already accounts for the bulk of Apple’s profits.

As a result, Wall Street chatter has intensified about Apple possibly eyeing Perplexity AI, sparking speculation that it might bid for the AI search startup to help ease worries about falling behind in the AI race.

Perplexity was valued at $14 billion in June, which, even with a premium price tag, wouldn’t dent Apple’s $34.7 billion net cash pile. That said, significant acquisitions aren’t really Apple’s thing—its biggest deal ever is still Beats Electronics, acquired for $3 billion over a decade ago.

Still, just last year alone, Apple returned $115 billion to shareholders through buybacks and dividends, demonstrating it has more than enough firepower to pull off a meaningful M&A if it really wants to.

Apple’s Growth Fears Haven’t Weighed on Stock Valuation

When we break down the recent fears around Apple’s investment story, it’s clear the market’s getting more cautious. Six months ago, the 5-year revenue CAGR (2025–2029) estimate for Apple was 7.8%, but after several downward revisions, it’s now just 6.5%, according to TipRanks data. The gap on the bottom line is smaller—the 5-year EPS CAGR has slipped from 13.7% to 13.3%, which I attribute to Apple’s higher-margin Services segment, already driving about 40% of operating margins, even though roughly 75% of revenue still comes from hardware.

The real problem is that these cuts haven’t really brought any multiple compression. Apple’s average forward P/E has hovered around 29.8x for months and still trades at 29.4x forward earnings—way above the industry median of about 24x.

But perhaps the biggest concern is that Apple has always played the overachiever, not the underperformer. These steady downward revisions don’t align with the company’s strong fundamentals narrative and may be an early sign that its growth story is starting to show some real structural cracks.

Is AAPL Stock a Buy, Hold, or Sell?

The consensus on AAPL is still mostly bullish, but there’s plenty of room for skepticism. Over the past three months, 25 analysts have weighed in: 14 are bullish, ten are neutral, and just one is bearish on AAPL stock. The average stock price target is $227.06, implying approximately an 8% upside from the current share price.

See more AAPL analyst ratings

Waiting on Apple’s Next Move

Apple stock has been stuck in a gray zone lately, trading sideways and still feeling the heat from the uncertainty surrounding tariffs and the need to diversify its supply chain beyond China quickly. On top of that, there’s growing pressure for Apple to step up its game in AI.

With other Big Tech players leading the AI charge, many had hoped Apple would at least keep pace; however, the lack of breakthrough AI innovations clouds its growth outlook and suggests slower momentum ahead. Since this hasn’t significantly lowered multiples, I am prudently neutral on Apple for the time being—waiting for either a better entry point if multiples compress or some major moves through R&D or M&A to disrupt the status quo.