MoffettNathanson founder: Here's what's next for Apple

Core Viewpoint - Analysts have upgraded Apple's stock to neutral and raised the price target by approximately $100, indicating that significant worst-case scenario risks have been mitigated [1] Risk Assessment - The two major risks that have been alleviated include tariffs and the Google antitrust case. Apple was particularly vulnerable to tariffs due to its role as a manufacturer and importer, but side deals have helped avoid the worst outcomes [2][3] - The Google antitrust case posed a risk to the payments Apple receives from Google, which account for 25% of its operating income. However, recent developments suggest that while these payments are deemed illegal, they will remain unaffected, thus removing a significant risk [3] Stock Valuation - Despite the upgrade from sell to neutral, analysts still consider Apple to be overvalued, trading at about 37 times earnings, which is a 24% premium to the S&P 500 and a 49% premium when excluding the MAG 7 [4][8] - The company is growing at a rate slower than the market, which raises concerns about sustaining its high valuation unless growth can be accelerated meaningfully [8][9] Innovation and Ecosystem - While Apple generates about half of its revenue from phones, the company has been recognized for its innovation, particularly in the app environment and the App Store, rather than in hardware alone [5][6] - The strength of the Apple ecosystem is highlighted as a key factor in customer loyalty, despite concerns about the company's slower growth compared to the market [7][10] Service Revenue Risks - A recent legal loss to Epic Games allows customers to process payments outside of the Apple ecosystem, which could impact the growth rate of Apple's services revenue, a crucial component of its business model [11][12]