Is Apple Stock Still a Buy at Record Highs? Shares Rise as Investors Flee AI Turmoil, but Valuation Fears Grow

CUPERTINO, Calif. — While turmoil at Nvidia rattled chip stocks last week, Apple went the other way, climbing to a new high as investors looked for safety in big technology names.

Apple shares rose 0.4% on Friday to close at $356.27, after hitting an intraday record of $360.83. That gives the iPhone maker a market value of about $5.18 trillion.

The stock is up about 31% so far this year, roughly twice the gain of the next-best performer among the so-called Magnificent Seven tech stocks.

A Safe Haven Amid the AI Selloff

Apple's gains came as other tech stocks fell. On Friday, when Apple rose, a major technology-sector fund dropped about 2% and the Nasdaq-100 fell more than 1%.

Analysts at Bernstein have pointed to Apple's appeal as a relatively safe holding during the AI selloff. Unlike chipmakers and AI developers, Apple doesn't depend directly on the huge AI infrastructure spending that has made those stocks volatile.

Its business rests largely on its devices and its fast-growing services division, which includes the App Store, iCloud and Apple Music. Its more than 2 billion active devices give it a steady stream of revenue.

Apple's latest quarterly earnings beat expectations, at $2.10 per share against forecasts of about $1.99. The stock still dipped about 1.9% after the report.

Apple was also linked to the Nvidia drama. Semafor reported that Nvidia was considering Apple chip executive Johny Srouji as a possible CEO candidate. Neither company has commented on the report.

Valuation Concerns

The rally has made Apple more expensive. The stock now trades at about 40 times earnings, well above its five-year median of about 31.

Some valuation models suggest the shares are priced above their estimated fair value. Analysts' price targets show the same tension: the median target from the 45 analysts tracked by one service is about $353, slightly below Friday's close.

Most analysts remain positive. Of those 45, 26 rate the stock a "buy," 13 a "hold" and six a "sell," a more mixed picture than for many big tech stocks.

What Could Drive the Stock

Bulls point to several possible catalysts:

continued strength in iPhone sales growth in high-margin services revenue Apple's push into artificial intelligence across its devices

Some analysts see the company as a long-term AI winner because of its huge base of iPhone users.

Technical signals are also positive. The stock has broken out of a short-term trading range, and some analysis services currently rate it a "buy" based on its momentum.

Risks

Investors also face risks:

A high valuation leaves less room for error if growth slows. Apple faces regulatory pressure in the United States and Europe over its App Store practices. Trade tensions and tariffs could affect its global supply chain and its sales in China. Buying a stock right after it hits a record can mean a pullback in the short term.

Apple's next earnings report is expected in late January, when investors will get a look at holiday-quarter sales.

For long-term investors, Apple's steady business and strong cash flow remain attractive. Buyers at current prices, though, are paying a premium for that stability. Some investors may prefer to build a position gradually rather than buy all at once.

This article is for informational purposes only and does not constitute investment advice. Investors should do their own research or consult a licensed financial adviser before making investment decisions.