Apple (NASDAQ: AAPL) has been one of the best tech stocks to own over the past decade. In this time frame, it’s up about 500%, discounting currency moves and dividends.
More recently, however, the iPhone maker’s share price has struggled. It has increased just 11% over two years, underperforming the S&P 500, and is basically flat across the past 12 months.
A lot of the weakness has come in the past three months. Over this time, the stock’s down 17.7%. Consequently, anyone who invested £10,000 in Apple shares in late February would now have about £8,230.
What’s been happening?
Sentiment for Apple shares has soured as the US-China trade war has heated up. The company reportedly has around 80% of its production capacity in China, with the rest dotted around Asia.
Recently, President Trump reiterated his desire to see Apple make iPhones in the US. And he threatened to impose a 25% tariff on iPhones produced abroad and sold in America.
Needless to say, relocating iPhone production to America would be very costly for Apple, potentially increasing the price of a smartphone significantly. I don’t see this happening.
Instead, Apple has been shifting production from China to India to diversify its supply chain. But it sounds like this might not be enough to satisfy the Trump administration.
I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else.
President Donald Trump, 23 May 2025.
Expert stewardship
Given the uncertainty here, I’m surprised the share price is not down by more. All this rejigging of production and supply chain is surely going to take a bite out of Apple’s profits.
Then again, if any company can pull it off successfully, it’s Apple. The firm has a fortress-like balance sheet and decades of experience expertly navigating geopolitics, especially in China.
If I was a shareholder (I’m not), I would be relieved that Tim Cook is still at the helm during this incredibly tricky period.
Should I buy Apple stock?
Earlier this year, I upgraded to the iPhone 16e. This is built for Apple Intelligence, and has some decent AI-powered features, but a fully revamped version of Siri might not be coming till 2026.
To be honest though, I’m not too bothered. I’m more than happy with the product, especially the noticeably better battery life. And my AirPods are a daily staple. Undoubtedly, the Apple ecosystem is incredibly strong.
On the other hand, I’m so happy with these products that I might not upgrade them for years. And this is a problem, I think, as Apple hasn’t brought out a game-changing product for years. Sales of the pricey Vison Pro VR headset have underwhelmed so far.
Looking ahead, analysts have 4%-6% revenue growth pencilled in between 2025 and 2027. Earnings are set to grow at a slightly higher rate, but I think the tariffs issue casts doubt on those projected numbers.
There’s also an antitrust probe going on, which could see Apple lose $20bn a year if it’s forced to drop Google as the default search engine on iPhones.
With the stock trading at a premium 30 times earnings, I currently have no plans to invest.
