Sell Your Apple Stock Now, Says Craig Moffett

This is really a valuation call, but it, but, and, and look, the market overall is, is pretty frothy valuations, but Apple, even relative to the mag seven peer group is now extremely stretched with a peg ratio of around three, where the rest of the mag seven trades with a peg ratio of around two. So there's this perceived safety in, in Apple, wonderful franchise, very dedicated customers, but there is no safety when you're paying 33 times earnings for a company that's growing organically in the very low single digits. And even with the, even with buybacks, earnings are, are still growing at sort of half the rate of the, of the rest of the mag seven. When I look at it, it's, it's the idea of a cell rating. That means a fractured free cashflow. Are you suggesting this will filter down in the mix of cash from operations, CapEx, and then finally free cashflow where they're going to miss the mark? No, no, no. I want to be, I want to be clear. We're not saying Apple is a broken company. I want to come back to some very real risks that we should talk about, but Apple is not a broken company. It's a broken valuation. And there are, as I said, some, some significant concerns that ought to be reflected in a lower multiple or at least a more sober multiple than what you've got right now. You know, there was this narrative over the past couple of months, particularly into the last couple of weeks of, of last year in 24, where, where everyone was talking about the fact that Apple was quote unquote, melting up in the face of no news. In fact, there was actually quite a bit of news and it was bad or at least sobering and concerning news. Obviously the risk of retaliatory tariffs when we got a Trump administration, but, but more saliently over the last couple of months, you've had the judge in the Google antitrust case say that the payments that Google makes to Apple for search, which remember that's 25% of Apple's operating income are patently illegal. Now we don't know how those will change, but there's obviously a risk that they do that ought to be reflected in the multiple. And then there's real deterioration in China and some obvious concerns that with China, the Chinese government is obviously not going to allow Western large language models to answer questions in China. So you're going to have to have Chinese partners that's got to be contemplated with, with margins and all that sort of thing. So again, nothing says that Apple is broken. Although one more thing, there are real concerns about whether AI is going to drive the kind of upgrade cycle that seems to be discounted in the stock. We're pretty skeptical. But Apple's not broken. It's the valuation that's broken.