Should you buy Apple's stock after earnings? These analysts see better options.

Apple sees iPhone trends improving, but analysts note its stock is more expensive than other hardware and smartphone plays like Qualcomm and Alphabet Apple gave a rosy iPhone sales forecast on Thursday. Apple's talk of faster iPhone sales growth had some on Wall Street hopeful for a sustained recovery, but other analysts saw better investment options. Shares of Apple (AAPL) have lagged behind the "Magnificent Seven" - and the S&P 500 - with their 8% year-to-date gain through Thursday's close. Among investor concerns were a lack of innovation in the iPhone business and a failure to capitalize on artificial intelligence the way other Big Tech players have. In that sense, Apple's talk of robust iPhone 17 demand and plans for heightened AI spending came as some comfort, helping to drive Apple's stock 2% higher in Friday morning action. Richard Windsor, an independent analyst at Radio Free Mobile, said, "iPhone replacement demand is more robust than it has been for several years." See more: Apple earnings send the stock higher on upbeat iPhone commentary But wasn't sold on a long-term Apple rebound, saying that some form-factor changes to the iPhone 17 may simply be getting iPhone users to upgrade iPhones earlier than they planned, meaning the company isn't seeing a sustainable change in its growth trajectory. The company is also dealing with the "black hole that is its AI strategy," he wrote. Windsor noted that Apple shares are trading at a higher multiple than shares of fellow hardware players Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), MediaTek Inc. (TW:2454), Samsung Electronics Co. Ltd. (KR:005930) and Qualcomm Inc. (QCOM), despite growth struggles for the iPhone manufacturer. "I would own any of these over Apple any day of the week," he wrote, while disclosing positions in Samsung and Qualcomm. Below are the forward price-to-earnings multiples for those five names, based on FactSet data Company Forward P/E Apple 33.02 Taiwan Semiconductor Manufacturing 25.05 MediaTek 17.64 Qualcomm 14.41 Samsung 13.07 Needham's Laura Martin thought Alphabet Inc.'s (GOOGL) stock (GOOG) looked like a more intriguing play than Apple's, given that shares of the Google parent company trade at a discount to Apple shares despite far better growth prospects. Alphabet's stock trades at 25.8 times forward earnings, according to FactSet data. Alphabet's revenue is growing two to three times faster than Apple's, Martin added. And the internet giant has a more tangible strategy around large-language models and generative AI than Apple does, plus leading or near-leading positions in AI, search, mobile, video and the cloud, according to Martin. Apple faces a "key strategic problem," in her view, because it can only use generative AI to enhance its ecosystem. Alphabet can use generative AI to improve Android as well - but through the cloud it can also "charge a fee for thousands of other companies to use its LLM, which aids its enterprise profitability and gives it the ability lower Android prices and improve its operating leverage faster," she wrote. UBS's David Vogt joined the others in flagging Apple's high stock multiple. He acknowledged that "near-term iPhone demand is solid," but said Apple shares were trading at 34 times his estimates for fiscal 2026 earnings, making for a premium of 40%-plus relative to the S&P 500 SPX. "Based on historical relative valuations, material share price appreciation in our view will likely have to come from positive earnings revisions," he wrote, as it's been "difficult to sustain" a premium of that magnitude. Don't miss: Why Alphabet's stock looks like a better play than Meta's in the AI race -Emily Bary This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 10-31-25 0954ET Copyright (c) 2025 Dow Jones & Company, Inc.

Should you buy Apple's stock after earnings? These analysts see better options.

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