Apple Stock Hits All-Time High: Is the Tech Giant Too Extended?

Apple has regained the throne as the world’s most valuable company as the tech giant closes in on a historic $4 trillion market capitalization.Despite a lackluster start for the stock earlier this year, Apple returned to its former glory and is back to outpacing the major US indexes. After a series of higher highs, Apple shares are now breaking out to new all-time highs in December as the iPhone maker benefits from continued strength in the large-cap tech space. The bullish theme around artificial intelligence certainly hasn’t hurt either.Following a better than 30% surge in 2024, is Apple stock now too far extended, or is the rally just getting underway?Buying at New All-Time HighsPurchasing stocks at new all-time highs has proven to be successful in the past. It’s the market’s way of telling us that higher prices are on the horizon.And when we analyze the state of the economy with a lower underlying trend in inflation, better-than-expected corporate earnings, and a resilient U.S. consumer, there’s plenty of reasons to suspect that the momentum can continue.The major indices pulled back last week while volatility spiked to levels not seen since the early August sell-off. But Apple stock was undeterred, gliding through the volatility gracefully and even ending the week at an all-time high:Image Source: StockChartsThe fact that Apple shares witnessed limited selling last week signals heavy institutional buying pressure. Stocks that hold up best through periods of volatility tend to lead the charge once the general market resumes its uptrend.The Business of AppleApple AAPL is engaged in the designing, manufacturing, and marketing of mobile communication and media devices, personal computers, and portable digital music players. Headquartered in Cupertino, California, Apple’s well-known products include the iPhone, iPad, Mac, and Apple TV, along with its software applications like iOS and the MAC OS X operating systems.In addition to the sales generated from the devices mentioned above, Apple’s business contains a Services segment that includes revenues from cloud services, the App Store, Apple Music, AppleCare, Apple Pay, as well as other licensing services that have become a major cash cow. Apple currently has more than 1 billion paid subscribers across the Services portfolio.If that all wasn’t enough, Apple dominates the Wearables market as consumers continue to adopt products like the AirPods and Apple Watch. Apple has made significant headway in this area, strengthening its presence in the personal health monitoring space. Other services include Apple News+, Apple Card, and Apple Arcade.With more than two billion active devices globally, the big story this year has been the rise of Apple Intelligence. In a partnership with OpenAI, Apple’s newest iPhones seamlessly integrate ChatGPT, helping users write with enhanced language capabilities, create stunning images, and communicate with a more capable Siri. Apple Stock – The Zacks RundownApple is part of the Zacks Computer – Mini Computers industry, which currently ranks in the top 34% of all Zacks Ranked Industries. Because it is ranked in the top half of all industries, we expect this group to outperform the market over the next 3 to 6 months.Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.Apple has exceeded earnings estimates in each of the past seven quarters. The company most recently delivered fiscal fourth-quarter earnings back in October of $1.64 per share, beating the $1.49/share Zacks Consensus Estimate by 10.1%. Apple delivered a trailing four-quarter average earnings surprise of 5.1%.Apple is currently a Zacks Rank #3 (Hold) stock. The company is projected to see earnings grow another 10% in the current fiscal year on revenues of $412.8 billion. Given Apple’s history of beating estimates, it wouldn’t be too surprising if these figures ended up being a bit light.What to Do NowBuying stocks when they make new highs has proven to be profitable throughout history. A stock eclipsing a previous high should be viewed as a sign of strength. Apple appears to be breaking out of a multi-month consolidation pattern, bolstering the bullish case.The market is telling us to expect the unexpected. A buoyant US consumer along with a bullish artificial intelligence theme have helped push tech stocks like AAPL back near previous highs. Make sure to keep an eye on this tech behemoth as the stock looks primed to end the year on a positive note.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks