Is Apple Stock About to Breakout?

After stumbling out of the gate this year, sliding more than 30% in the first four months, Apple (AAPL) has staged an impressive comeback. Over the past three months, the stock has outpaced nearly every other tech giant, trailing only Alphabet (GOOGL).

Earlier in the year, skeptics pointed to Apple’s lackluster AI strategy and slower growth compared with rivals like Microsoft (MSFT) and Alphabet. But a strong Q3 report, highlighted by a 13% year-over-year jump in iPhone sales and record services revenue, has helped the company reclaim leadership. The latest iPhone launch has also fueled optimism, delivering meaningful upgrades across the product line, including the new iPhone Air.

At the same time, Apple is signaling a more deliberate approach to AI, committing $500 billion in US investments tied to artificial intelligence, silicon engineering, and data centers. Additionally, rather than racing to build its own standalone AI model, Apple may be positioning itself as a strategic partner in the broader AI ecosystem and leveraging its strong position in eyeball real estate with mobile devices.

With strong momentum behind it, Apple now looks poised for a technical breakout that could carry shares to fresh record highs. Below, I’ll break down the trade setup.

Apple Stock Forms Bull Flag

In recent months, Apple’s price action has resembled that of a classic growth stock, climbing steadily higher. Over the past two weeks, shares have been consolidating into an increasingly tight bull flag, which typically signals an imminent breakout.

The key level to watch is $257. A decisive breakout and close above this resistance would confirm the bull flag and likely propel Apple to new record highs.

Today’s session briefly pushed above $257 before reversing back into the range, underscoring why it’s important to wait for a closing confirmation rather than intraday moves. On the downside, a close below support at $253.50 would suggest the stock needs more time to reset before attempting another leg higher.

Are Apple Shares Overvalued?

Concerns about Apple’s valuation are valid. The stock is trading at an elevated multiple while sales are expected to grow only in the mid–single digits. That said, Apple still commands an extraordinary position with over 1.5 billion iPhone users and a rapidly expanding services business. It’s also worth noting that nearly all Mega cap tech stocks are trading at premium valuations.

• Apple (AAPL): 34.6x forward earnings, above its five-year median of 28.6x, with earnings projected to grow 13.1% annually over the next three to five years.
• Microsoft (MSFT): 33.7x forward earnings, above its five-year median of 32.6x, with earnings projected to grow 14.9% annually over the next three to five years.
• Alphabet (GOOGL): 24.4x forward earnings, above its five-year median of 22.6x, with earnings projected to grow 14.9% annually over the next three to five years.

Based purely on earnings growth relative to valuation multiples, Alphabet screens as the most compelling opportunity. Still, factors such as earnings revisions, investor flows, and market sentiment must also be considered before drawing firm conclusions.

Should Investors Buy Shares in APPL?

Apple’s rebound highlights the company’s unmatched ecosystem strength, but it also raises the question of whether now is the right time to buy. From a technical standpoint, the setup is constructive as a confirmed breakout above $257 would likely pave the way for new highs. Fundamentally, while Apple does trade at a premium, that premium reflects the stability of its cash flows, the stickiness of its user base, and the growth runway in services and AI-driven innovation.

Investors looking for a value play may find Alphabet more compelling on a relative basis, but Apple remains a core holding for those seeking exposure to high-quality, large-cap tech. With momentum building and strategic investments in AI and infrastructure gaining traction, the stock’s long-term story remains intact as flows continue to find their way into shares.

In short, Apple may not be cheap, but it has regained leadership and a breakout from here could reward investors willing to pay up for quality.

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This article originally published on Zacks Investment Research (zacks.com).

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