Apple Stock Surges to $190 on Massive Buyback—New High Ahead or Trap?
After $110B in buybacks and a 46.6% margin peak, can AAPL break the $195 ceiling—or fall to $151? | That's TradingNEWS
Apple’s Margin Game Intensifies as iPhone Sales Shrink—Services Pick Up the Slack
Apple's fiscal Q2 2025 results sent a clear signal: the iPhone era may no longer carry the load it once did. Revenue fell to $90.8 billion, down 4.3% year-over-year, with iPhone sales sliding 10% to $45.96 billion. That’s nearly $5 billion less than last year, a number that shook Wall Street despite expectations of a seasonal slowdown.
Yet under the surface, Apple’s Services business delivered a different story—one of strategic rebalancing. Services revenue hit a record $23.87 billion, up 14% year-over-year, proving that Apple’s shift toward margin-rich recurring income streams is not only working but accelerating. It now accounts for over 26% of total revenue, cushioning the fall from hardware weakness. That high-margin model helped push Apple’s gross margin up to 46.6%, the highest in 12 years.
Mac and iPad Take Hits—But the Wearables Engine Holds Firm
Beyond the iPhone slump, Apple’s Mac and iPad businesses also struggled. Mac revenue fell 11.2% to $7.45 billion, while iPad sales dropped a steep 16.7% to $5.56 billion. This is the third consecutive quarterly decline in both categories. While Tim Cook mentioned an “exciting product pipeline,” the market isn’t buying the wait-and-see narrative—especially as global PC demand remains soft.
However, Wearables, Home, and Accessories showed resilience, clocking in $7.91 billion, roughly flat year-over-year. This consistency underscores the stickiness of the Apple ecosystem and helps sustain user engagement across hardware products despite declining flagship revenues.
China Revenue Drops 8%—But India and Emerging Markets Shine
Greater China revenue came in at $16.37 billion, down 8% from a year earlier. The pressure from local competitors like Huawei and Xiaomi—combined with regulatory headwinds—continues to bite into Apple’s mainland dominance.
Yet the company struck a surprisingly optimistic tone on India, Latin America, and other developing regions. Tim Cook noted double-digit growth in these markets, signaling where the next billion-dollar opportunities may lie. It’s also no coincidence that Apple is aggressively ramping up production in India, hedging against geopolitical risk and supply chain bottlenecks linked to China.
Buybacks Back in Force—$110 Billion Capital Return Plan Lifts Sentiment
Apple’s share repurchase program remains one of its strongest weapons in investor relations. The company announced a staggering $110 billion buyback authorization, the largest in its history. It repurchased $27 billion in shares in Q2 alone and paid $3.8 billion in dividends.
This return of capital is more than a show of strength—it’s a strategic buffer against valuation concerns, especially with revenues trending down. The market responded with relief: AAPL stock jumped nearly 7% post-earnings and is now flirting with $190, up from $175 before the report. That puts the market cap back above $2.9 trillion.
AI, Custom Silicon, and Vision Pro—Is Innovation Enough to Reignite Growth?
Apple is now betting heavily on innovation to power its next phase. At WWDC 2025, expectations are high that the company will unveil new AI-integrated features across iOS and macOS. But more importantly, analysts are watching for deeper Apple Silicon upgrades and potential enhancements to Vision Pro.
The mixed-reality headset has yet to reach mass adoption, but Apple confirmed that Vision Pro sales are in line with internal expectations. While no hard figures were disclosed, insiders estimate unit shipments of ~250,000 this quarter. That’s not a game-changer—yet. But with the ecosystem expanding and developers slowly warming to spatial computing, this could become a silent tailwind.
Valuation Check—Expensive, But Defensible
Apple is currently trading at a forward P/E of ~28x—above its 5-year average of ~25x. Bulls argue that the quality of earnings, driven by Services and buybacks, justifies the premium. Bears, however, point to declining hardware revenue and stagnant overall growth.
Still, Apple’s cash position of $56 billion, $110 billion in buybacks, and 46.6% gross margins make it one of the most capital-efficient businesses on Earth. Unless services growth stalls or iPhone sales collapse further, valuation compression seems unlikely in the near term.
Verdict: Hold for Now—Watch $190 and $151 Price Levels Closely
With the stock hovering near $190, the next resistance sits around $195, last seen in December 2023. If the stock breaks past that, psychological momentum could drive a rally toward the all-time high of $199.62.
On the downside, $175 acts as near-term support. If broken, the stock could retreat toward the $160–$151 zone, where institutional demand last surged in early 2024.
Rating: Hold. If Apple executes well at WWDC and services momentum holds, we could revisit all-time highs by Q3. But if iPhone sales continue to decay and AI innovation underwhelms, a pullback is likely.
