Apple (NASDAQ: AAPL) has been one of the most consistent performers in the Nasdaq for years. Even during the tech rout of 2022, when most of the other Magnificent 7 names saw steep declines, the stock barely sold off. However, its bullet-proof characteristics have been sorely tested so far in 2025, with the stock down 19%. Having sat on the sidelines for years, I am now wondering if this is the buying opportunity I have been waiting for.
iPhone appeal
Not that long ago, a new iPhone model would be greeted with a huge fanfare. Hoards of people would queue to get their hands on the latest and greatest features. But those days seem like a distance memory. Of course, it’s difficult to read very much into that. Times move on and, besides, Nvidia has long stolen the limelight when it comes to such razzmatazz.
Some iPhone evangelists will always be lured by the appeal of the latest model and with enhanced AI features. But Apple just doesn’t sell to the high end consumer. It sells to everyone. In the US, the iPhone is ubiquitous. But with an ongoing cost-of-living crisis for most Americans, there is no incentive for many to upgrade. Less so, with bolt-on AI features that have yet to capture the public’s imagination.
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Deglobalisation trends
The news of an exemption of tariffs for smartphones and other electronics from China has certainly been a relief for investors. But I remain to be convinced that this move will be enough to assist its share price over time.
The predominant reason why Apple has become the biggest company in the world was its ability to ride the tail of increasing globalisation trends. When China entered the World Trade Organisation in the early 2000s, supply chain guru Tim Cook propelled it into the big league.
Back then, the company was predominantly a niche player in the computer manufacturing industry. Of course, the iPhone was the product that transformed its fortunes. But that doesn’t tell the entire story. When it moved operations to China its margins doubled in a few years.
As deglobalisation trends continue to accelerate, there is an undoubted risk that its lofty forward price to earnings of 27 times doesn’t reflect this new reality.
Bull case
I must admit that I remain to be convinced that the iPhone will ever be mass manufactured in the US. Analysts predictions on cost fluctuate wildly. But with sales flagging the iPhone 16 with a $1,000 price tag, would consumers really queue up to buy at $2,000 or $3,000? I doubt it.
As the manufacturing plant of the global economy, China has undoubted competitive advantages. It’s not just Apple that relies on China; all major tech companies do too. Replicating a complex supply chain ecosystem built around just-in-time and other advanced manufacturing techniques would take years.
China may very likely remain as a global manufacturing hub for tech hardware, but I still don’t see the deglobalisation trend reversing. I think that anyone believing the next 15 years will be as lucrative for Apple as it was for the past 15 years is deluding themselves. It may be a great company, but even great companies can become overvalued. Therefore, I will wait for a better entry point.
