With Strong Holiday Outlook for iPhones, Can Apple ETFs Gain Ahead?

Apple AAPL shares have lost 0.1% over the past week (as of Nov. 3, 2025), gained about 6.7% on Oct. 30 after-market-close to reflect the upbeat earnings results, and have advanced about 4.7% over the past month. The stock is up about 10% year to date and has surged about 21.1% over the past year.

Apple shares have been striving for direction for a long time. While its shares failed to infuse enthusiasm into investors’ minds after its much-hyped iPhone 17 launch in early September, its latest earnings results offered some positive cues.

Let’s delve a little deeper.

Strong Demand Outlook for iPhone 17

Apple beat Zacks Consensus Estimates on both lines in its fourth-quarter fiscal 2025 results. The company indicated that both revenues and iPhone sales numbers hit a record for the fourth quarter. Services revenues, another closely watched metric, also hit a record at $28.8 billion, as quoted on CNN.

During Apple’s earnings call, CEO Tim Cook said the company expects the December quarter’s revenues “to be the best ever for the company and the best ever for the iPhone,” suggesting strong iPhone 17 sales, as quoted on the same CNN article.

Note that in late September, some market watchers viewed the iPhone 17 launch as only incorporating modest enhancements rather than radical features (as quoted on Economic Times), dampening hopes for a strong upgrade cycle. However, Apple defied those critics.

The iPhone 17 series sold 14% more units than iPhone 16 in the first 10 days after its launch in the United States and China, according to Counterpoint Research, with the base iPhone 17 and iPhone 17 Pro Max seeing the strongest demand, as mentioned on CNN.

Apple’s AI Initiatives

Apple is typically viewed as a laggard in AI acceleration within the Magnificent Seven group.  But the same CNN article mentioned that CEO Cook sees AI as presenting new opportunities for the App Store and said that Apple Intelligence — its suite of AI-driven features — is leading more users to upgrade their iPhones.

But there are continued concerns about Apple's progress in artificial intelligence, as some AI features have been delayed, and investors are seeking a solid AI roadmap from the company. Apple's personalized and AI-powered Siri is expected to debut in 2026. AAPL had earlier suggested that a much better Siri would arrive this spring, as quoted on Investopedia.

Apple’s Fate in China: Bleak?

Apple’s Americas’ sales were $49.03 billion in the fourth quarter of fiscal 2025, up 6.1% year over year and accounted for 47.8% of total revenues. However, Greater China sales fell 3.6% to $14.49 billion and made up about 14.1% of total sales.

Stiff competition from China’s homegrown players is a threat to Apple. Chinese Xiaomi Corp. launched its flagship smartphone Xiaomi 17 series in late September, apparently to directly challenge Apple in the premium market, as quoted on South China Morning Post.

Apple held about 62% sales of the global premium smartphone market in the first half of 2025, per Counterpoint Research. Although Xiaomi has a small share in the premium segment, its premium sales surged 55% in the first half of the year (compared with only 3% sales growth in Apple).

This indicates that Xiaomi is eyeing to capture market share in the finest segment (at least in China). Note that Apple gained market share in emerging markets but lost in China to Huawei and Xiaomi, per Counterpoint Research.

Stretched Valuation of Apple?

Valuation-wise, Apple stock is moderately costly. For example, Apple shares trade at a forward P/E of 33.84X, higher than Meta’s forward P/E of 25.31X, Microsoft’s P/E of 32.31X and Alphabet’s P/E of 26.68X. Apple’s P/E is much higher than the forward P/E of 24.10X possessed by Xiaomi (per Yahoo Finance).

Apple-Heavy ETFs in Focus

We believe that Apple needs meaningful AI advancements, be it organically or inorganically. The smartphone segment is ruling, but strong competition awaits down the line. We expect Apple shares to see moderate trading ahead.

Against this backdrop, investors can play Apple in a basket approach to minimize company-specific concentration risks. This ETF approach will also allow investors to ride any potential rally in Apple shares.

Fidelity MSCI Information Technology Index ETF FTEC – Apple weight 22.5%

iShares U.S. Technology ETF IYW – Apple weight 13.8%

Vanguard Information Technology ETF VGT – Apple weight 12.7%

Technology Select Sector SPDR Fund XLK – Apple weight 12.4%

iShares Top 20 U.S. Stocks ETF TOPT – Apple weight 7.7%

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

Zacks Investment Research