Apple Inc. (NASDAQ:AAPL) is asking investors to believe two things at once. First, that the iPhone can still deliver meaningful growth, and that a company of its size deserves a premium earnings valuation. Apple’s one-year total return reached 30.25, well above the S&P 500’s nearly 14% return. The rally raises a sharper question than whether customers still want iPhones, asking how much earnings growth is already reflected in the price.
According to its most recently available statistics, Yahoo Finance lists Apple at 35.21 times forward earnings, compared with 25.71 in June 2025. At that valuation, the sustainability of growth and the quality of earnings deserve particular attention, so let’s take a deeper look.
But before that, we meticulously compiled a list of the best big-name stocks to buy according to financial media, and there are nine stocks other than AAPL that rank on that list. Access the complete list for free here.
Bull Case
Apple’s June-quarter results offer a compelling answer to doubts about its maturity. Revenue rose 16% to $109.4 billion, and diluted EPS climbed 29% to $2.02. iPhone revenue increased from $44.6 billion to $54.3 billion, accounting for much of the company’s year-over-year sales increase. This is not merely a business collecting fees from devices sold years ago, as the results show that the company’s core hardware franchise is still capable of generating substantial additional revenue. Apple is facing a deeper iPhone probe in India. Read more about whether its software warranty could become a bigger issue.
Services provide a different source of strength for the company, generating $30.7 billion in the quarter, up from $27.4 billion a year earlier. Services can contribute disproportionately to overall profitability, even without growing as quickly as iPhone sales.
The cash-flow figures make the valuation argument more tangible. During the first nine months of fiscal 2026, Apple generated $117 billion in cash from operating activities, up from 81.75 billion in the prior year period, and spent $6.8 billion on the acquisition of property, plant, and equipment. Apple also repurchased $62.1 billion of shares during the period. These are substantial financial resources, although buybacks should not be confused with growth in the underlying business. Which other big name stocks does the financial media favor? Access our complete list here for free.
Bear Case
We also shortlisted the best healthcare stocks to buy according to hedge funds. Check out the complete list here to make an informed decision. The strongest caution comes from Apple’s own results. Its reported third-quarter gross margin of 50.1% included approximately two percentage points of benefit from tariff refunds. Those refunds also contributed $0.11 to diluted EPS. The headline 29% EPS increase therefore includes a favorable item that investors should distinguish from recurring operating performance. Read more extensively about AAPL’s bull and bear case in our insightful article on how Apple Is Speeding Up. Siri Isn’t.
The balance of growth also matters, as while iPhone generated almost half of total quarterly revenue, iPad sales declined from $6.58 billion to $6.19 billion. Apple’s product categories are not all expanding at the same pace, making consolidated growth especially sensitive to its largest businesses.
Research and development expenses also rose from $8.86 billion to $11.72 billion, faster than revenue. That spending may support future products and software, but it represents an expense today, and the return on those investments cannot be determined from the latest earnings alone.
Conclusion
Apple Inc.’s (NASDAQ:AAPL) valuation is supported by substantial cash generation, growing iPhone revenue, and a highly profitable Services business. What remains less certain is how much of its recent earnings acceleration can persist, in part without temporary tariff benefits.
At 35.21 times forward earnings in Yahoo Finance’s dated snapshot, the central question is not whether Apple is a successful company but rather how consistently that success can translate into the future earnings investors are paying for today.
READ NEXT: Can Eli Lilly Catch Novo Nordisk in the Oral GLP-1 Race? AND Abbott vs. Intuitive Surgical: Is Consistent Growth Better Than Premium Growth?
This article is originally published at Insider Monkey.
