Apple’s $430 billion rally faces scrutiny of product unveiling

Barring a surprise at Tuesday’s unveiling, Apple shares are seen to have little room for further gains after adding nearly $430 billion in market value since the end of July

Investors expecting Apple Inc.’s biggest product event of the year to serve as the next catalyst for its recently-revived stock are likely to come away disappointed.

After posting the best month in more than a year in August on relief from President Donald Trump’s tariffs, Apple shares have continued to rise with another 3.3% advance last week in the wake of an antitrust ruling that allowed the iPhone maker to continue receiving billions of dollars in Alphabet search payments.

Shares fell 0.8% on Monday.

Barring a surprise at Tuesday’s unveiling, Apple shares are seen to have little room for further gains after adding nearly $430 billion in market value since the end of July, particularly with questions about the company’s artificial intelligence strategy still hanging over the stock.

“It’s hard to recommend opening or building a position going into the event, especially following this rally, since we’re not expecting to see the kind of features that will get people really excited to buy,” said Clayton Allison, portfolio manager at Prime Capital Financial. “If it continues to stumble with AI, I worry about the stock.”

Apple is expected to introduce its iPhone 17 lineup, which will reportedly include a new skinnier version of the device. Upgraded versions of the Apple Watch and Vision Pro headset are also anticipated.

The key question is whether such updates will be enough to juice growth that has long trailed peers. The issue is especially important now in the absence of more advanced AI features, and with significant changes expected over the coming years, including a foldable iPhone in 2026.

History is not on the side of the bulls, at least in the short term, as Apple shares typically fall on days when the company unveils its latest iPhones. In the AI era, there’s an added risk. If the event fails to convince investors it’s making adequate progress deploying features based on the technology, that could raise further questions about its relatively tepid growth and its elevated stock market multiple.

Valuation Questions

While Apple’s 10% revenue growth in its fiscal third quarter was the fastest in more than three years, it’s expected to slow for the next two quarters. It also pales in comparison to rivals like Alphabet Inc. and Meta Platforms Inc., which are trading at cheaper valuations.

At about 30-times profits projected over the next 12 months, Apple is the second-most expensive of the six-biggest companies in the S&P 500, which also includes Nvidia Corp. and Microsoft Corp.

Even though Apple has rallied 38% from an April low, the stock remains down more than 5% for the year while the Nasdaq 100 Index is up 13%. With the shares trading near the highest since February, the event could be an excuse for investors to take profits, as they have in the past.

Apple’s iPhone reveals “have traditionally been sell-the-news events,” according to an Aug. 25 note from Bank of America. However, the stock tends to recover in the 30 to 60 days afterward, according to analyst Wamsi Mohan.

Even without exciting new features, some on Wall Street see another way for Apple to improve growth: by raising prices, something it hasn’t done in years.

The company’s opportunity to raise prices is “a still under-appreciated growth tailwind,” Morgan Stanley analysts led by Erik Woodring wrote in a Sept. 4 note to clients. Such a move combined with “conservative FY26 consensus growth expectations could make the launch a positive catalyst, for once,” they wrote.

A combination of the stock’s lofty price tag and the company’s weak growth have soured investors on the shares. Fewer than 60% of the analysts tracked by Bloomberg who cover Apple recommend buying it. By comparison, 97% of the analysts covering Microsoft have buy ratings. Apple closed Friday at roughly $240, above the stock’s average 12-month price target of $238, suggesting Wall Street isn’t expecting a further rally, at least for now.

“We’re comfortable holding Apple, but we’re less enthusiastic since the stock isn’t cheap and the upside looks limited here,” said David Katz, chief investment officer at Matrix Asset Advisors. “The biggest risks have eased, but we won’t get another leg of upside until we have a clearer AI roadmap, and if that comes at this event, it’ll be a surprise. I think the stock will be higher over the long term, but I don’t see much more over the short term.”