Why is Apple stock lagging the S&P 500 in 2025?

Following Nvidia inventory’s current dip, Apple (NASDAQ: AAPL) has as soon as once more taken the crown of the S&P 500‘s largest firm. That is the case even after the iPhone maker’s 9.3% year-to-date share worth fall. The inventory underperformed the index within the course of.

Having mentioned that, I’m positive longer-term shareholders aren’t too apprehensive. Apple inventory continues to be up 270% in 5 years, pushing the market cap properly above $3trn.

For context, that’s over than 100 instances bigger than Nokia, the agency that Apple disrupted with the launch of the groundbreaking iPhone in 2007.

What’s happening?

There appear to be just a few the explanation why Apple inventory has paused for a well-deserved breather in 2025.

For starters, the expertise sector has suffered a sell-off previously couple of weeks. President Trump’s on-off tariffs are inflicting uncertainty within the inventory market, they usually might even impression the agency’s earnings sooner or later. Whereas these dangers linger, the Apple share worth is prone to be risky.

Additionally, the inventory is buying and selling at 34 instances earnings, which is a premium to the already expensive S&P 500. So there may be a priority about valuation right here. And this was probably a think about Warren Buffett’s determination to chop his large stake to lower than half what it was.

Lastly, Apple has suffered a slowdown in iPhone gross sales, particularly in China. That is right down to elevated competitors and market saturation, as properly delays in rolling out vital AI upgrades for its gadgets.

AI teething issues

This final level is value increasing on, as some buyers concern that Apple may be shedding floor as we transfer deeper into the AI age. It has launched Apple Intelligence on the brand new iPhone 16, however the AI-equipped model of Siri has been delayed because of glitches. This reportedly won’t be out until subsequent yr now.

Whereas that is clearly removed from perfect, I feel the corporate has time and can get this proper. In spite of everything, it can take a number of years for all 2bn+ iOS customers to improve to gadgets with superior AI capabilities.

Apple has mentioned its AI options will prioritise preserving knowledge on customers’ gadgets slightly than within the cloud. This might entice customers involved about knowledge privateness.

I think these are AI teething issues that will probably be largely forgotten about just a few years from now. As a buyer, it’s not a deal-breaker for me, as I’ll nonetheless be upgrading to a brand new Apple cellphone quickly. I’m more than pleased to be locked into the agency’s extremely sticky ecosystem.

Will I purchase the inventory then?

Analysts count on income and earnings per share to develop 4.6% and eight.6% respectively this yr. That’s not significantly excessive development for a inventory that’s buying and selling at 29 instances ahead earnings.

After all, it goes with out saying that Apple is an unimaginable firm and model. It generated over $100bn in free money circulate final yr and introduced a $110bn share buyback programme in Could. That was the most important in US company historical past!

Nevertheless, as a result of premium valuation and modest top-line development, I’m in no rush to purchase Apple shares in the present day. I feel there are doubtlessly higher choices for my portfolio.