The S&P 500 has sprinted 4.92% higher so far in 2025, while the tech-heavy Nasdaq-100 has tacked on an even healthier 5%.
Yet the most valuable public company on earth, Apple (NASDAQ: AAPL), is still nursing a double-digit loss. Through the close of trading on June 27, Apple is down roughly 19.7% year-to-date, putting it in the bottom decile of S&P constituents and making it the clear straggler among the once-celebrated “Magnificent Seven.”
Below the surface, investors are contending with a cocktail of legal headaches, tariff risks, slowing hardware demand, and a nagging sense that Apple is a step behind in the artificial-intelligence arms race. While index-tracking exchange-traded funds keep floating higher, Apple’s share price looks stuck in the mud. What forces are holding the stock back and what has to change before it can rejoin the party?
A Storm Cloud of Antitrust Litigation
The U.S. Department of Justice, joined by 16 states, hit Apple with a sweeping antitrust suit in March 2024 that accuses the company of illegally monopolizing the smartphone market. The case moved into an aggressive discovery phase this spring, raising the odds of remedies that could tug at Apple’s tightly controlled ecosystem.
Across the Atlantic, Brussels is already brandishing its stick. Apple has been fined €500 million for “anti-steering” tactics and now faces daily penalties of up to 5% of global revenue, about $58 million, unless it demonstrates compliance with the EU’s Digital Markets Act.
It matters to the stock because regulators are circling Apple’s profit sanctuary of services. The App Store alone enjoys gross margins north of 75%, and any forced fee cuts or mandated sideloading may well shave billions off annual operating income.
Hardware Cycle Fatigue Meets Geopolitics
For all Apple’s talk of services, the iPhone still drives about half of revenue. Unit sales have stalled as owners hold on to their devices longer and incremental upgrades fail to wow. Needham’s recent downgrade called the upcoming iPhone 17 cycle “the least compelling in a decade.”
China, Apple’s second-largest market, has been another pressure point. Although May data showed Apple briefly reclaiming the top spot in Chinese smartphone sales, revenue from the region slipped 2.4% in the March quarter and remains hostage to Beijing’s occasional procurement bans.
Add in trade friction: fresh White House tariffs on Chinese tech components will lift Apple’s cost of goods by an estimated $900 million in the June quarter alone. CEO Tim Cook is hustling to shift iPhone assembly to India and Macs to Vietnam, but duplication isn’t cheap.
The AI Narrative Hasn’t Stuck, Yet
Wall Street spent the first half of the year bidding up anything with a convincing generative-AI story. Apple’s answer at WWDC 2025, “Apple Intelligence”, was met with polite applause and a 1.5% drop in the share price the next day. Barclays called the features “incremental” and “unlikely to drive an upgrade cycle.”
Rumors that Apple may scoop up Perplexity, the buzzy AI-search start-up, have perked up more speculative minds. Bank of America argues that a deal could “fast-forward Siri five years overnight,” but also warns of integration headaches and a looming copyright suit that could drag Apple into fresh litigation.
Until investors see an unmistakable AI catalyst, whether that’s a transformative acquisition, a best-in-class on-device model, or a true services monetization plan, capital is likely to flow toward the Googles, Microsofts, and Nvidias of the world instead.
Analyst Sentiment Has Turned Cautious
A telling barometer of mood is in early June, Needham yanked its long-standing Buy rating, citing a “valuation rich for a 2% revenue-growth story.”
Barclays has kept its Underweight and $173 target even after Apple’s slide, arguing the iPhone is now “ex-growth” and Macs, iPads, and Vision Pro are “irrelevant” to the investment case.
While the analyst community is hardly monolithic, Morgan Stanley, UBS, and Goldman remain bullish, downgrades grab headlines and feed the narrative that Apple’s best days are behind it. The sentiment pendulum will have to swing back before momentum investors feel compelled to chase the name again.
Even Shareholder-Friendly Moves Failed to Impress
Historically, Apple’s cure for market malaise has been simple: write a bigger buyback check. True to form, the board authorized another $100 billion repurchase and lifted the dividend 4% in May.
Strangely, the stock still fell 4% on the news and investors seemed disappointed the buyback was smaller than last year’s $110 billion slug.
That reaction spotlights the core problem that financial engineering alone can’t offset concerns about growth, regulation, and competitive positioning. Until Apple proves it can reignite top-line momentum, Wall Street may keep treating buybacks as lipstick on a slowing pig.
Reasons for Patience
It’s not all gloom. Apple still threw off $24.8 billion of net income last quarter and set a fresh March-quarter EPS record. Services revenue grew 12% to $26.6 billion, and margins remain enviable even under a stricter fee regime.
China may also surprise on the upside. A new government subsidy program that partially reimburses phone purchases could reignite demand just in time for the iPhone 16e refresh. And if Apple can land that Perplexity deal—or unveil a genuinely jaw-dropping generative-AI feature set at its September iPhone event, the narrative could flip quickly.
Finally, Apple’s balance sheet remains a fortress. Net cash sits near $55 billion, giving management ample firepower to pursue strategic M&A, accelerate India manufacturing, or cushion any regulatory fines that do materialize.
What Could Get the Stock Moving Again?
- Regulatory clarity: A settlement—or at least a clear litigation timeline—would lift a fog now hanging over App Store economics.
- A bona-fide AI wake-up call: Whether through an acquisition, a home-grown foundation model, or a services bundle, investors need evidence that Apple can monetize AI beyond incremental iPhone upgrades.
- A surprise hardware cycle: If early teardowns reveal that iPhone 17’s neural engine or satellite connectivity is a must-have, the upgrade wave could pull revenue growth back toward double digits.
- Stabilizing China: Watch the July and August sell-through data; a sustained rebound would allay fears that local competition (Huawei, Xiaomi) is permanently eating Apple’s lunch.
Apple’s “Coiled Spring”
History says betting against Apple for long stretches is dangerous. Over the past 15 years, every 20% drawdown has preceded a meaningfully positive three-year total return. Today’s malaise feels similar to 2015 (China slowdown) and 2018 (battery-gate), episodes that ended with fresh all-time highs.
The pieces for a snap-back are on the table: an outsized installed base hungry for AI features, a services business still compounding at double digits, and what may be the most aggressive supply-chain diversification effort in Silicon Valley.
With Apple checking even two of the four boxes above by early 2026, a re-rating toward its historical mid-20s earnings multiple will put the share price back above $250, good for a 25%+ total return from current levels.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
