Apple (AAPL) kicked off its fiscal year 2025 with a powerful performance in the first quarter. Apple remains a dominant player in the consumer electronics and technology sectors. Following the release of the highly anticipated iPhone 16 Pro and iPhone 16 Pro Max, both powered by Apple Intelligence, the company reported an all-time high quarterly revenue of $124.3 billion. Apple will release its second-quarter results on Thursday, May 1.

The Magnificent 7 stocks have again made headlines. Last week, Alphabet (GOOGL) and Tesla (TSLA) announced their earnings, kicking off the earnings season. Meta (META) and Amazon (AMZN) will also release their quarterly results this week. 

Valued above $3.1 trillion, Apple stock is down 17% year to date, compared to the Nasdaq Composite Index’s ($NASX) 11.7% drop. Let’s see if Apple is a good buy now on the dip ahead of the earnings release.

Fiscal 2025 Started on a Strong Note

Apple designs, manufactures, and markets consumer electronics, software, and digital services. Apple’s ecosystem is tightly integrated, keeping users within its suite of products and services, which include the iPhone, Mac, and Apple Watch, among others. Apple’s flagship product, the iPhone, generates the majority of revenue. In the first quarter, the iPhone remained the revenue driver, generating $69.1 billion, with strong demand for the new iPhone 16 lineup.

During the earnings call, management mentioned that Apple had record upgrade rates and high customer satisfaction,  reaching 96% in the U.S. according to 451 Research. Growth was particularly strong in markets such as Canada, Western Europe, and India. Additionally, the Mac segment revenue increased 16% to $8.9 billion, owing to excitement over the new M4 chips and Apple Intelligence’s growing role across devices. Apple Intelligence is a centerpiece of Apple’s recent innovations, having debuted with new features in October and expanded globally in December. The iPad business also grew by 15% year-over-year to $8.1 billion, with new users accounting for more than half of recent purchases. 

One of Apple’s fastest-growing and most profitable segments is Services, which includes the App Store, Apple Music, iCloud, and Apple TV+, among others. Services provide recurring revenue and higher margins than hardware, thereby diversifying the company's earnings. It generated $26.3 billion in revenue, representing a 14% increase. Diluted earnings rose 10% to $2.40 per share. 

Despite continued investments in AI and new products, Apple maintains a strong cash position. The company paid off $1 billion in maturing debt, bringing its total debt to $97 billion at the end of the quarter. Additionally, it had $141 billion in cash and marketable securities at the end of the first quarter. 

The company has also focused on returning profits to shareholders, earning a reputation among income-oriented investors. It returned more than $30 billion to shareholders in the first quarter, with $23.3 billion in share repurchases and $3.9 billion in dividends. Furthermore, it has increased dividends for the past 14 years, with the most recent increase of 4% in fiscal 2024.

Trade Tensions Exist, but Apple Is a Long-Term Play

Trade tensions, especially between the U.S. and China, present a significant risk to Apple. This month, President Donald Trump imposed tariffs on imported goods from China, India, Vietnam, and a number of other countries. Apple heavily relies on Chinese factories for the assembly of its devices, particularly through Foxconn. Any escalation in tariffs, export restrictions, or labor issues in China could disrupt supply chains, increase costs, or delay product rollouts.

Trump has temporarily exempted electronic devices from most tariffs on Chinese imports. For the time being, Apple appears to be in the clear, but it has not fully addressed these challenges. Even if the Trump administration decides to impose higher tariffs on electronics at a later date, Apple may find a way to avoid them. Apple has diversified its supply chain, with increased manufacturing in India, Vietnam, and Malaysia. However, Trump’s imposed tariffs on these countries might also pose headwinds. We’ll learn more about the company’s plans to address these trade tensions in its quarterly report on Thursday.

Nevertheless, Apple’s long-term prospects remain strong. With an install base of more than 2.35 billion active devices, Apple is poised for success in 2025. From expanding its AI footprint to innovating in health, spatial computing, and services, the company is committed to shaping the future with technology that empowers and protects its customers. 

Despite currency headwinds, management expects total revenue to grow by low to mid-single digits year over year in the second quarter. Furthermore, services revenue is expected to grow by low double digits year after year. Gross margins could range from 46.5% to 47.5%. Meanwhile, analysts predict that Apple’s second-quarter revenue will be around $94.2 billion, a 3.7% increase year-over-year, with earnings of $1.62 per share, representing a 5.8% increase.

What Does Wall Street Say About Apple Stock?

On Wall Street, Apple stock holds a “Moderate Buy” rating. Of the 37 analysts covering the stock, 19 recommend a “Strong Buy,” four rate it a “Moderate Buy,” 12 suggest a “Hold,” and two rate it a “Strong Sell.” With an average price target of $238.26, analysts project potential upside of around 15% over the next 12 months. The highest price target is $300, indicating the stock could rise as much as 45% from current levels.

At 29x forward 2025 earnings, Apple stock appears overvalued, but it also reflects investors’ confidence in the company’s long-term growth prospects. Reliable earnings, an unrivaled ecosystem, strong brand loyalty, recurring service revenue, and a strong balance sheet may justify paying the premium. Apple can still be a good long-term investment, especially when bought during market dips.