Key Points
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Apple is riding the strong tailwind from its latest iPhone release.
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The company could launch new devices that will help it capture more market share.
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Apple could face several near-term headwinds, but its long-term outlook is strong.
- 10 stocks we like better than Apple ›
Apple (NASDAQ: AAPL) has defied expectations over the past few years. Despite steep tariffs and significant antitrust and regulatory scrutiny, the company’s financial results have improved, and the stock has performed better than many expected. Apple currently boasts a market cap of $4.6 trillion, and there are good reasons to think it will maintain solid momentum through the end of the year and exit 2026 as one of the very few companies to have achieved a $5 trillion valuation. Read on to find out more.
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The iPhone is driving growth
Apple’s detractors have claimed that the company’s most important device, the iPhone, no longer generates the kind of excitement it once did. This is true, but the company’s latest iPhone, the 17, has arguably exceeded expectations, partly thanks to various artificial intelligence (AI)-powered features. It is driving a solid cycle of renewal. As a result, Apple is posting its best top-line growth in several years. In the second quarter of its fiscal year 2026, ending on March 28, Apple’s revenue came in at $111.2 billion, up almost 17% year over year. Here’s how that compares to the company’s recent quarters.
AAPL Revenue (Quarterly YoY Growth) data by YCharts
Further, Apple’s earnings per share rose 22% to $2.01. What’s even more impressive is that Apple achieved these results despite supply constraints. The company projected revenue growth between 14% to 17% for its upcoming quarter, which would be another solid performance for the tech leader. Apple’s shares may not jump significantly after its next update, but the company looks likely to maintain the momentum it has had so far this year given its strong financial results.
A potential catalyst on the way
As per usual, Apple will announce new devices later this year. This could be one of the most anticipated lineups in recent history. Apple is set to release a foldable iPhone. It could become a big deal. The company’s competitors have found significant success with foldable smartphones. Apple could increase its market share with this new launch, boost its user base across its ecosystem, and expand its paid subscription base in its high-margin services segment. That’s why the market may reward Apple’s stock once it formally announces this new iPhone, especially if the reveal impresses investors and analysts.
Apple has already introduced several new devices this year that could help expand its installed base. In March, it announced its cheapest laptop ever, expanding beyond the premium market it has typically served. Apple also introduced Siri AI, a more powerful version of its famous personal assistant. Apple’s launch of new devices and AI features could strengthen its ecosystem, drive upgrade cycles, and create new revenue opportunities by making its products more useful and personalized.
Some reasons to worry
Several factors could disrupt Apple’s progress, including recent geopolitical tensions. Although they have eased somewhat in the past few weeks, nobody knows whether that’s a permanent improvement. And if things turn sour again and impact the economy, it may have spillover effects on the stock market. Even beyond that, Apple’s new upcoming devices may simply not live up to expectations. It’s likely the market has already factored some of the foldable iPhone’s success into the stock price. If it’s not as impressive as some expect, the company’s share price may drop. Elsewhere, Apple is getting a new CEO.
Tim Cook is stepping down from this role on Sept. 1, and John Ternus, the company’s senior vice president of Hardware Engineering, is taking the helm. The market does not like uncertainty, and leadership changes (particularly for companies with iconic CEOs like Apple) introduce a degree of uncertainty that makes some investors uncomfortable. Apple’s shares dropped after the announcement. Another dip related to this news is unlikely — but it wouldn’t be unprecedented.
Apple stock is still a buy
Despite the caveats, Apple’s underlying business is strong. Economic problems may disrupt its operations, but they will be temporary. And while its devices occasionally disappoint, the company can regroup and make adjustments as needed. Further, despite the CEO change, the biggest driver of the company’s performance will be fundamentals, which are still in great shape and should remain so under new leadership, unless something catastrophic happens. Here’s the bottom line: Given Apple’s current lineup and upcoming devices, the stock is well positioned to perform well through the end of the year. Even more importantly, Apple’s long-term prospects remain strong as it expands its ecosystem and creates new, high-margin monetization opportunities that will lift its profits.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
