History Says You Should Know These 3 Things Before Buying Apple Stock (AAPL)

For those considering investing in Apple (AAPL), there are three key historical insights to keep in mind. First, Apple has never been the first to disrupt or innovate in any market category. The iPhone, their flagship product, was launched in 2007 amidst a landscape already filled with popular smartphones. Despite this late entry, Apple managed to revolutionize the market through superior integration of hardware and software, creating a powerful ecosystem.

Similarly, Apple's recent foray into AI, highlighted by the launch of Siri AI with Apple Intelligence, has faced criticism for delayed releases. However, the company's vast distribution through 2.5 billion active devices positions it to leverage AI effectively. Second, Apple's long-term financial performance has been impressive.

Over the last decade, net income has surged by 282%, with a steady 20% year-over-year growth through the first nine months of fiscal 2026. The launch of the iPhone 17 lineup has been exceptionally strong, contributing significantly to this growth. Third, while the consensus among sell-side analysts is that Apple's earnings per share will grow at a compound annual rate of 13% from fiscal 2025 to fiscal 2028, the current valuation suggests that investors may be paying a significant premium for the stock.

Apple is trading at a P/E ratio of 38.1, approximately 259% higher than the valuation of $10.6 per share that Berkshire Hathaway initially purchased in 2016. This premium is unlikely to justify sustained high returns, given the scale of the business. Prospective investors should weigh these historical insights and the current valuation before making investment decisions.

Despite not being one of The Motley Fool's top 10 stock picks for long-term growth, Apple remains a compelling investment due to its history of innovation, strong financials, and loyal customer base.