Apple Stock Forecast 2025
After hitting an all-time high of $145.09 on Jan. 25 ahead of its fiscal first quarter earnings release, Apple (NASDAQ: AAPL) stock has mostly traded within a relatively stable range in the months since. Of course, it’s a little challenging for a mega cap juggernaut like Apple to stage a massive rally since the company currently boasts a market cap of over $2.2 trillion.
Many tech stocks have been fairly volatile throughout the first half of 2021 as investors rotate into value stocks, but Apple is modestly priced relative to its earnings power. Shares are trading at around $133 in late June, or just 30 times earnings.
Analyst price targets generally only go out about 12 months at the most, even as Wall Street will model farther out for other important financial metrics such as revenue or earnings per share (EPS). The average price target among 39 analysts for Apple stock is $155.99, with a high of $185 and low of $90.
Price: $145.86 (as of close Jul 30, 2021)
Revenue Growth: 26.77%
Apple Stock Forecast 2021
Turning to Wall Street’s forecasts, analysts are expecting Apple to generate $354.1 billion in revenue in 2021, which would represent 29% growth over the $274.5 billion in sales the Cupertino company posted in 2020.
Following a dip in revenue in 2019, Apple ended up becoming an inadvertent beneficiary of the COVID-19 pandemic as the wholesale shift to remote work and learning boosted demand for computers and tablets.
The Mac and iPad segments both hit all-time records in 2020 for revenue. At the same time, Apple has spent the past few years diligently working to grow its services business, executing well on its post-purchase monetization strategy and introducing more and more first-party services.
Total paid subscriptions across all platforms (including first-party and third-party offerings) now stands at 660 million.
The consensus estimate calls for EPS of $5.16 for 2021, which would be a whopping 57% jump in profitability over 2020. That bottom line would be driven in part by Apple’s ambitious buyback program, which is highly accretive due to its sheer size. Apple’s board just increased the company’s repurchase authorization by $90 billion.
That means Apple shares are currently trading at roughly 26 times 2021 estimated EPS, which is in line with its current valuation multiples.
Apple Stock Forecast 2025
Looking farther out, revenue is forecast to climb to $425.7 billion in 2025, good for a compound annual growth rate (CAGR) of 7.6% from 2020 levels. There are certainly other companies posting higher growth rates, but the law of large numbers makes it more difficult for a company of Apple’s size to continue growing as fast.
Here’s how Wall Street believes Apple will get there.
Here are the consensus estimates for Apple’s EPS for the next several years.
Net income is expected to grow to an incredible $98.3 billion in 2025, according to Wall Street’s models. That would be EPS of $6.14. Based on current prices, Apple shares are trading at 20.8 times 2025 estimated EPS.
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Apple Stock Forecast 2030
Expectedly, the farther out the forecast, the greater the uncertainty and risk in a company achieving those long-term predictions. Still, since stock valuation is fundamentally based on discounting future cash flows to the present, having some analyst estimates to consider is better than nothing even though a lot can change over the course of nine years.
With that in mind, here’s the path analysts see Apple’s top line taking.
In terms of EPS forecasts, analysts see the bottom line approaching $10.
Apple Bull Case
As far as what Apple would need to do to hit these financial targets, the tech giant will need to continue innovating with its expansive portfolio of products and services.
The global smartphone market has largely matured, so the iPhone business is unlikely to put up the astronomical growth rates it did in the past. Investors can expect regular and incremental hardware updates in this business, which is by far the most important to Apple. The good news is that Apple commands industry-leading customer loyalty, so it can count on its users to reliably upgrade every few years.
The wearables market is among the most exciting opportunities. Apple dominates the space with Apple Watch and a growing lineup of audio accessories such as AirPods products. Climbing wearables adoption in the years ahead will drive growth in this segment for Apple.
The greatest uncertainty is the Apple Car. The company has been eyeing the automotive market for years, hoping to one day introduce an autonomous electric vehicle (EV) of some type. But this is uncharted territory for the technology company, and the risks associated with attempting to enter the auto industry are enormous considering the capital expenditures typically associated with manufacturing. Apple has reportedly shifted its strategy numerous times and its direction remains unclear.
Apple now offers services that cater to numerous aspects of customers’ daily lives, including music streaming, video streaming, cloud storage, mobile gaming, financial services, and even fitness. If the company can continue developing new services that address other needs, the services segment should flourish.
Apple Bear Case
While Apple has a strong track record of success, it also has numerous failures in its past.
The company’s attempt to enter the smart speaker market, the HomePod, flopped due to the hefty price tag combined with lackluster integration with third-party services. Apple once unveiled the AirPower, a wireless charging mat that was designed to charge numerous devices at once, only to cancel the product years later due to technical challenges.
Apple Maps is still largely considered inferior to Alphabet’s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Maps, even after investing billions of dollars into the app.
These examples demonstrate that even a company as innovative as Apple can make mistakes. An underwhelming new iPhone could dent growth in the core business, or a decision to ditch a widely-accepted standard (which Apple has a history of doing) could lead to backlash. Apple may choose to bet billions of dollars on Apple Car, which may not pay off if the company lacks a cohesive go-to-market strategy.
The relatively cheap valuation of Apple shares, combined with the dividend payout, could provide some downside protection for investors, but it’s also conceivable for the stock to underperform the broader market if it makes strategic missteps.