Around mid-day on July 28, Apple stock jumped around 3% to achieve, for the first time, a market cap of $5 trillion, hitting a number that only one enterprise, Nvidia, had ever reached. A few days before, in fact, Apple had surged past the GPU giant to regain its mantle as the world’s most valuable company (Nvidia’s recently retreated to $4.79 trillion). Looks like Apple got its most recent boost from a Bloomberg report that the iPhone-maker is planning a big push into the smart home market by launching a new Siri-powered home hub and updated Apple TV, alongside a fresh HomePod mini, all of which could potentially hit the market by this fall. Plus, Apple used to get brickbats from Wall Street for its super-cautious approach in AI investment. Now that it appears the hyper-scalers may be overbuilding data centers en route to a glut, the analysts and money managers are applauding Apple’s restraint.
Still, the recent moonshot in Apple’s stock poses a tough choice for folks and funds mulling a purchase right now, or tempted to sell and profit from the recent windfall on fears it will fade: Apple’s just become something it seldom was before, extremely, even scarily, expensive.
The recent liftoff makes Apple by far the priciest member of the Mag 7, of course excluding Tesla. Its price-to-earnings ratio reached 41.2 on the “$5 trillion day,” between 37% and 145% above the figures for Nvidia (30.2), Amazon (27.7), Meta (21.6), and Alphabet (16.8). Historically, Apple’s handed shareholders significantly more cents for every dollar in earnings than it provides today. From 2013 to 2020, its PE never exceeded 20, and averaged around 16. Even post-Covid, its multiple fluctuated around a median of 28, and as recently as the close of Q1, 2024, sat at 26.4.
In fact, from early 2022 to Q1 of 2024, Apple’s EPS flatlined, and so did its share price, leaving its PE well below 30. Profits barely budged until mid-2025, then accelerated, rising 25% on a trailing, four-quarter basis through Q1 of 2026. But in that span, its stock broke free, doubling from $170 in Q1 of 2024 to today’s $350. That huge divergence where the shares waxed at four times the rate of profits drove its PE to the current, vertiginous 41-plus.
Apple is a buyback machine, and at these prices, shareholders are getting a lot less bang for their buck #
Apple depends heavily on share buybacks to raise its EPS. In fiscal 2024 and 2025 (ended September 30) it spent $185 billion in repurchases, equal to 92% of its GAAP net earnings. When its PE was 25, Apple was raising EPS 4 cents, or 4%, for every dollar in buybacks. But at a 41 multiple, it’s lifting per share profits by much less, by 2.4 cents and a like percentage.
Hence, investors face two headwinds. First, they’ll get much less lift from buybacks than in the past, a puny one in fact for the simple reason that Apple will be repurchasing not cheap but ultra-costly shares. Second, it’s highly unlikely that Apple’s PE will remain at 41. That’s almost 50% over the S&P 500’s already elevated average, and just look at where its Mag 7 confreres are sitting. If its multiple drifts back to 30 over the next five years, Apple will need a 5% annual push from a combination of repurchases and earnings expansion just to stay even, to maintain its share price at current levels. Put simply, at these prices, Apple must find a big new growth engine to drive its stock price higher.
Apple’s business is doing fine, but its stock is doing stupendously. That big split’s the rub that makes Apple a much less shiny investment.
Subscribe to Fortune Gulf Brief. Every Tuesday, this new newsletter delivers clear-eyed, authoritative intelligence on the deals, decisions, policies, and power shifts shaping one of the world’s most consequential regions, written for the people who need to act on it.