Analyst Says Apple (AAPL) Needs 'More Than' Executive Shakeup Amid Its 'Vulnerability'

We recently published a list of 10 Stocks Everyone is Talking About After Trump’s New Tariffs. In this article, we are going to take a look at where Apple Inc (NASDAQ:AAPL) stands against other stocks everyone is talking about after Trump’s new tariffs.

Countries are beginning to react to President Donald Trump’s new reciprocal tariffs and analysts believe things might not go according to the White House’s expectations, with American workers and consumers likely to see the impact of new duties.

Fred Kempe from Atlantic Council said in a latest program on CNBC that many countries can impose strong retaliatory tariffs against the US.

“I think we have to recognize what’s going to be implemented is going to be the highest effective tariff rate since the 1930s. What also happened in the 1930s is you had new trading blocks, you had new trading partners finding their way to each other, and you could find that that happens as well. And let’s not forget what also happened in the 1930s afterwards. We hope that’s not going to happen now, but, um, you know, a trade war just really never serves, in the end,  global stability, global peace.”

Kempe said investors failed to realize that Trump does not “care” about falling stock prices as he is looking to change the global trade system.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article, we picked 10 stocks Wall Street analysts are talking about. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Apple Inc (NASDAQ:AAPL)

Number of Hedge Fund Investors: 158

Bryn Talkington, Requisite Capital Management managing partner, said in a latest program on CNBC that Apple Inc (NASDAQ:AAPL) is fundamentally a hardware company and that has become its vulnerability since it has to rely on third parties for software. The analyst says Apple Inc (NASDAQ:AAPL) needs more than just an executive shakeup to fix its issues. She was referring to Apple’s latest executive reorganization following the Siri update delay.

“They need to do more than shake up, you know. I sold half my position in December. I’m in that camp of Steve of saying the people that thought we were going to have some super cycle—I never saw that even remotely happening. Apple had a Trojan horse in Siri. The problem, though, is that horse is still in the barn, and that could ultimately be the AI agent that everybody uses. But the problem and the vulnerability with Apple today is Apple is a hardware company. They’ve always been a hardware company—75% of the revenues come from hardware. They are now reliant on third parties to do a venture with them, whether it’s BU, Alibaba in China, or OpenAI here. And I think that makes them incredibly vulnerable to being able to pull this off and actually have an upgrade cycle, which is what they need to get revenues going because this is a hardware, not a software company.”

Apple’s last quarterly results were helped by Services revenue in the latest quarter, but the key challenges haunting the company remain as they were. Many analysts believe just a few AI apps would not be enough to trigger a broader upgrade cycle for iPhone. Apple is dealing with currency headwinds as the stronger US dollar is expected to reduce top-line growth by 2.5% next quarter. For Q2 FY2025, management expects overall revenue to grow in the low to mid-single digits. Apple’s stock is trading at a premium valuation, with a price-to-earnings ratio of 39-40x, a price-to-free-cash-flow ratio of 33-34x, and a PEG ratio exceeding 3x. Upcoming quarters would be difficult for Apple and its current valuation is not justified.

Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:

“The fund maintained a position in Apple Inc. (NASDAQ:AAPL) throughout the quarter through the release of the company’s new iPhone 16 in September. Company leaders were excited about the release of the new model, as this is the first model that will feature enhanced AI capabilities through the Apple Intelligence features. Sales for the first few weeks in October and November trailed behind year over year sales from the iPhone 15, as availability of Apple Intelligence was not compatible with all iPhone models. Apple announced a partnership with OpenAI that has allowed the integration of ChatGPT into the Apple ecosystem, separate from the core Apple Intelligence features. This partnership highlights continued progress from Apple to introduce AI capabilities into its products and we expect the iPhone 17 to have even more expansive AI capabilities, increasing potential demand for the new model that is on track to be released in 2025.”

Overall, AAPL ranks 1st on our list of best mid cap growth stocks. While we acknowledge the potential of AAPL, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.