Should You Pick Apple Stock Over Its Competitors

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Apple (AAPL) trades at 39.5 times earnings. That multiple is the highest in a group of six companies that includes Microsoft, Alphabet and Dell Technologies, yet Apple grew revenue more slowly than four of those five peers. Buyers paying that price appear to be betting that demand for Apple's iPhone and Mac keeps growing, and that Apple holds its margin as memory costs rise. So what is Apple delivering today for the extra price?

Apple Earns Alphabet's Margin At Over Twice The Price

Apple delivers no more today than Alphabet does. Apple posted a 33.2% operating margin over its latest four fiscal quarters, level with Alphabet's 33.1%. Alphabet grew revenue 20.1% over its own four quarters, outpacing Apple's 14.2%, yet Alphabet stock trades at 15.9 times earnings. That multiple is helped by Alphabet's $244 billion of net income, well above its $148 billion of operating income. Alphabet runs an interactive media business rather than making hardware. It matches Apple's margin and beats its growth for well under half the price.

What Apple can point to is a speed-up. Apple's revenue grew 0.4% in the twelve months ended June 2024 and 6.0% in the twelve months ended June 2025, and growth over the latest twelve months was faster again. The stock price appears to assume that speed-up lasts.

Can Apple Make iPhone And Mac Fast Enough?

No, not yet. Demand for the iPhone and Mac is holding up so far, and Apple cannot build enough devices to meet it. In the June quarter, iPhone revenue rose 22% from a year earlier to $54.3 billion, and Mac revenue rose 29%. On the July 30, 2026 call, management said both products were selling far better than forecast. Management also said short supply of the advanced manufacturing processes used to make its processors held sales back.

Management expects those shortages to get worse. It expects revenue to grow 9% to 11% in the September quarter, against 16.4% in the June quarter. It named two reasons: tighter supply of the iPhone, Mac and iPad, and currency moves worth about two and a half percentage points of growth.

Is Apple's Margin Safe From Rising Memory Costs?

Not fully. Apple's margin has held up so far, although part of it came from tariff refunds. The company's operating margin over the latest twelve months was the highest of the 40 fiscal quarter ends since fiscal Q4 2016. Gross margin reached 50.1% in the June quarter, but management said tariff refunds added about two percentage points to that figure.

Memory chips are the next strain. Management expects Apple to pay even more for memory in the September quarter, with memory prices still rising after that, and Apple reluctantly raised some of its own prices. Management guided to a gross margin of 47% to 48% for the September quarter, which includes about one percentage point from tariff refunds.

What Apple Has To Keep Doing At This Price

Apple's P/E is high against its own past as well. Priced at the end of September 2026 on its latest four reported quarters, the multiple was higher than at 36 of the 40 fiscal quarter ends since fiscal Q4 2016. If demand for the iPhone and Mac or the margin falters, you would own the group's most expensive stock without Alphabet's growth or Microsoft's 46.8% operating margin.

So far, demand for Apple's iPhone and Mac is running ahead of what the company can build. The margin is less certain, with memory costs still climbing and the guidance including a smaller lift from tariff refunds. Apple's gross margin for the September quarter is the number to watch when Apple reports, expected in November 2026.

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