Over the decades, many investors have made lots of money from Apple (NASDAQ: AAPL). In fact, owning Apple stock has generated tens of billions of pounds in profits for Warren Buffett’s company Berkshire Hathaway alone.
But the tech giant has seen 17% wiped off its share price so far in 2025 and Buffett has sold a large part of his holding in the past couple of years (though he retains a sizeable stake).
So might Apple keep sliding? Or could now be a buying opportunity to add some to my portfolio?
A share I’d happily own
Buffett’s approach to investing is to try and buy into great companies at attractive prices.
I will come onto the price part of that in a moment. But what about the business – is Apple a great company? From an investor’s perspective, I think the answer is a resounding yes.
Based on last year’s performance, if you take five minutes to read this article, then Apple will have earned around $892,000 just in the time you took to reach the end. That is not revenues – that is net profit. In a mere five minutes.
Apple is an absolute machine. That is not some lucky coincidence. Rather, it has focused on an area of the economy where customer demand is high, resilient and indeed growing.
It has carved out a niche that gives it strong pricing power by combining a powerful brand, unique technology and a view of how to use tech that can help set it apart from many rivals. That has given it a large customer base, for many of whom it would be highly inconvenient to switch to other manufacturers or service providers, even if they wanted to.
Apple isn’t cheap
So then, why has Buffett been selling? I am not privy to his precise rationale. But one thing that strikes me about Apple stock now compared to when Buffett started buying it (less than a decade ago) is how expensive it looks.
It has risen 128% in the past five years.
Even after its weak performance in the first half of this year, the share trades on a price-to-earnings ratio of 32. That looks pricy to me even if Apple keeps doing as well as it has been. But last year was the second in a row when net income fell.
At $94bn it was well above the annual total of under $60bn Apple had been making in the years before the pandemic. If Apple’s earnings keep falling, I think the stock could turn out to be badly overpriced even at its current price.
One for my watchlist
Will that happen? Tariff disputes and weak consumer confidence are both clear risks to the firm at the moment.
Still, it continues to have deep strengths. If it navigates tariff disputes astutely and updates its product line to match not just evolving consumer needs but also shifts in their spending power, I think Apple might actually do even better in the next couple of years. That could see the share price bounce back.
For now though, it still looks overvalued to me. I will watch its price movements without buying just yet.
