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Even during the good times, Magnificent Seven stocks hardly moved in lockstep. The tariff-induced market shake-up has made that even more evident, as vulnerable names — like Apple (AAPL) — struggle to gain traction without a clear path ahead.
But even as the prospect of a high-tariff regime — and a presidential threat — could deflate the company, the bull and bear cases largely look past the levies. Instead, they focus on the iPhone maker’s established advantages and its long-held baggage.
The political environment has changed for Tim Cook; that’s hard to deny. But for his Wall Street backers and detractors, the fundamental Apple story remains, both the good parts and the bad.
The bull case for Cupertino relies on its resilient earnings, a legacy built on underpromising and overdelivering. Executives have for years delivered stable results, seemingly perfecting the art of managing expectations. That may be especially hard to see now. As my colleague Josh Schafer reports, the Magnificent Seven combined for 62% of the S&P 500’s advance in May, with all but one of the names outperforming the benchmark index’s 6.2% gain. The sole laggard? You guessed it: Apple.
Ahead of the company’s annual developers conference next week, Apple stock is down almost 20% for the year.
But bulls see the gap between Apple’s performance and the broader market shrinking over time. Despite regulatory pressures and heightened competition, its stability and predictability hold advantages. As Bank of America analysts led by Wamsi Mohan wrote in a note this week, “Apple is seen as a defensive investment where even in challenging times, it meets or slightly beats consensus forecasts, and isn’t prone to big guidance misses.”
Apple’s commitment to shareholder returns also underscores its dependability. Buybacks and dividends are to Apple investors what the company’s ecosystem of gadgets is to its customers: a good reason to stick around.
As Mohan and his colleagues observe, Apple’s aggressive buybacks act like a powerful buffer to protect earnings. By snatching back tens of billions of dollars worth of stock every year, Apple can still grow its EPS even if revenue stagnates. The scale of Apple’s financial wizardry — and cash generation — is hard to replicate.
Bears, on the other hand, acknowledge Apple’s enormity but see a lumbering giant past its prime.
“Bears question whether Apple has a ‘next big thing’ on the horizon that can re-ignite substantial growth, or if the company is now essentially at the maturity stage of its innovation cycle, relying on incremental improvements and accessories,” Mohan wrote.
Where bulls view Apple’s services business as a growth engine, bears point to a deceleration from earlier years, undercutting a pillar of Apple’s expansion thesis. In response to a maturing market for smartphones and longer upgrade cycles, the company’s backers have leaned on services revenue to soften the blow of slowing device sales. It’s unrealistic, the bears argue, to think Apple can continue to squeeze even more subscription cash from its user base with more shows starring Jon Hamm when its services business has already grown so much.
And then there’s the threat of AI disruption. If the iPhone is the nexus of a universe of apps, then a shift to an AI-driven interface — whether that’s a new, screenless device or a reimagined operating system — would threaten Apple’s flagship platform. Just last week, former Apple design chief Jony Ive announced he’s working on a new consumer product with Sam Altman and OpenAI — and this week, in a joint interview with Laurene Powell Jobs, referenced the iPhone’s dark side.
The threat of onerous tariffs isn’t helping Apple’s prospects. But if you look past them, it’s clear that the tech giant faces big questions about its long-term ambitions that have nothing to do with trade policy.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
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