Apple Jumps 18% in Three Months: Buy, Sell or Hold the Stock?

Core Insights - Apple shares have increased by 17.6% over the past three months, outperforming the Zacks Computer and Technology sector, driven by a strong fiscal Q4 outlook, the launch of iPhone 17, and significant U.S. investments totaling $600 billion despite tariff challenges [1][8] Financial Performance - iPhone sales rose by 13.5% year over year to $44.58 billion, representing 47.4% of total sales for the third quarter of fiscal 2025 [2][8] - The company anticipates net sales growth in the mid to high single digits for the September quarter (fourth-quarter fiscal 2025) [2] - The Services segment is projected to achieve sales of $108.29 billion in fiscal 2025, reflecting a 12.6% increase from the previous year [17] Market Position and Competition - Apple is facing challenges in the AI sector, lagging behind competitors like Amazon, Microsoft, and Alphabet, which may impact its stock performance [6][23] - Year-to-date, Apple shares have decreased by 2%, while Alphabet and Microsoft shares have appreciated by 25% and 21.3%, respectively [6] Valuation Metrics - Apple's stock is considered overvalued, with a forward price/sales ratio of 8.32X compared to the sector average of 6.73X, indicating a stretched valuation [20] - The Zacks Consensus Estimate for Apple's fourth-quarter fiscal 2025 earnings is $1.74 per share, showing a 6.1% increase from the previous year [18] Strategic Developments - The updated iPhone portfolio is expected to enhance sales, and the expansion of Apple Intelligence across devices is anticipated to drive growth [13][23] - Apple TV+ has achieved significant recognition, winning 22 Emmys and receiving a record 81 nominations, which may bolster its services revenue [17]