AAPL: Breakthrough In Future Price-in

$Apple(AAPL)$ has been one of the weaker performers among the Mag7 stocks so far this year, until last week when this sense of "seeing through a haze" suddenly cleared up.

Previously, performance had been dragged down by the sluggish trade-in market for iPhones. However, looking beyond the iPhone 17 series, we can see the potential for foldable screens and AI innovations to reignite growth. Under such pressure, once the innovation cycle ignites, valuation elasticity is no joke.

Product Cycle: Current Stagnation vs. Future Ignition

In the short term, the iPhone has failed to meet market expectations. While many had bet on another wave of device upgrades in 2025, reality has poured cold water on those hopes—the June 2024 quarter saw the first signs of declining iPhone sales. The reasons may lie in material design or in the failure to stimulate user demand. Regardless, with the iPhone accounting for over 15% of revenue, this has immediately created temporary pressure.

However, capital markets never focus solely on the present. A more compelling narrative is already unfolding:

• iPhone 17: Positioned as "affordable." Pricing strategies, carrier plans, and trade-in programs all serve to lower the barrier to purchase. Carriers are clearly willing to ramp up promotions, effectively laying the groundwork for sales in advance.

• Foldable iPhone: Positioned as the pivotal variable in the "boom cycle." Should it gain traction, driving over 10% growth is no pipe dream. Even more compelling, it could amplify the AI narrative, bridging the imagination of hardware and computing power.

  

AAPL itself is now a call option.

On one hand, Apple holds long-term upside potential (folding screens, AI-enhanced new product cycles); on the other hand, it also carries "over-the-counter-style speculative elements," where opportunity and risk coexist. This necessitates a "gambling mindset"—remaining optimistic about the long term while accepting short-term volatility risks.

The underlying optimism stems partly from capital expenditures. Cook's tone is more upbeat than last year: "Producing differently... is a much happier comment on capex compared to others." It's clear management is taking a more proactive stance on CapEx. Apple remains committed to pouring resources into R&D and hardware infrastructure—particularly in foldable screens and AI-related areas. Far from resting on its laurels, Apple is building momentum.

Valuation Cycle Transition

Since mid-September, AAPL's stock price has generally trended upward with volatility, ultimately breaking through resistance levels and turning positive for the year.

Currently, AAPL trades at a 38x trailing twelve-month P/E ratio, NTM PE is 33.2 also, slightly above its historical median. This reflects a market-assigned "trust premium"—the belief that foldable screens and AI will usher in a new product cycle.

However, it's also important to recognize that there's limited upside potential for valuation, as near-term earnings growth remains lackluster. The stock's resilience stems from "passive holdings and share buybacks providing support," while incremental gains reflect the market's "bet" on its future prospects. Buying AAPL now isn't about chasing bargains, but rather wagering that it will deliver on its long-term "hardware + AI" narrative.

Apple exhibits a classic duality: in the short term, it's a giant weighed down by iPhone fatigue; in the long run, it holds rare assets like foldable screens and AI narratives. The secondary market reflects this—flat in the short term, yet long-term capital remains reluctant to exit.

For investors, Apple now resembles a call option with time value: whether it pays off depends on the sparkle of its product lineup over the next two years. But before that happens, be prepared to navigate through a period of uncertainty.

$AAPL 2x Leveraged ETF - Direxion (AAPU)$ Direxion 2x Leveraged Long ETF - Apple Inc. (AAPU)