Apple's Growth Stalls as AI & Cloud Leaders Forge Ahead

Apple's market cap leadership fades as Microsoft and Nvidia thrive in growth. Sluggish growth, legal issues, and stagnant EPS raise investor caution. Is Apple losing its edge?

Date: 01-06-2025

AI Rating: 3

Slower Revenue Growth and Earnings Pressure

The report outlines that Apple has experienced dismal revenue growth of only 3.3% over the past three years, starkly trailing behind competitors like Microsoft, which achieved 36%, and Nvidia, which posted over 300% growth. This lack of momentum might make investors uneasy, particularly as consumer demand for iPhones diminishes. Additionally, the release of underwhelming products, such as the Vision Pro, has compounded these concerns. In the context of rising inflation, Apple's stagnant revenue becomes even more alarming, indicating a potential struggle to maintain competitiveness.

P/E Ratios: A Mixed Picture

In comparison to its peers, Apple's trailing price-to-earnings (P/E) ratio of 31 appears more attractive, especially against Microsoft's 35 and Nvidia's 46. However, it's essential to consider that Microsoft's and Nvidia's valuations are justified given their robust EPS growth. Apple's EPS, conversely, has barely increased, which may not bode well for its valuation sustainability in the long run. The anticipated pressures from legal battles regarding its App Store practices and the potential loss of its lucrative search engine deal with Google could further impact Apple's earnings prospects.

Uncertain Market Position

The report emphasizes that, unlike competitors fully leveraging the AI and cloud sectors, Apple is losing its competitive edge. With the increasing market capitalization of companies like Microsoft and Nvidia, it seems unlikely Apple will regain its position as the largest company by market cap anytime soon. This decreases investor confidence as implications grow that Apple may continue to lag behind its peers in innovation and growth.

Overall, the combination of slowing revenue growth, stagnant EPS, and threatening legal hurdles creates skepticism about Apple's future profitability and market position. Investors holding Apple stocks may need to reassess their strategies in the current financial landscape.

Key Metrics: Ratings

Regarding the areas of earnings per share (EPS) and revenue growth, Apple shows severely weakening trends, warranting a negative outlook. The stagnant growth in EPS receives a rating of 4, while the concerning revenue growth rates warrant a further rating of 3. Given these indicators and forecasting continued declining performance, Apple’s stock may be seen as more risky in the short term.

Stocks: AAPL MSFT NVDA