Could Buying Apple Today Set You Up for Life?

Every investor has heard of Apple (NASDAQ: AAPL). The consumer tech juggernaut has worked out to be a fantastic investment. Its share price has catapulted a jaw-dropping 14,460% in the past 20 years (as of March 17). Investors who bet on the business early have certainly generated monster wealth.

Despite the impressive historical performance, the market cares about what the future might hold. Could buying Apple, the world's most valuable company with a market cap of $3.2 trillion, set you up for life? Here's what investors should know.

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What makes Apple a great company

In my opinion, Apple should at least be on your investing watch list. That's because this is a high-quality enterprise.

For starters, Apple has a stellar track record of delighting its customers. Its hardware products, most notably the iPhone, are incredibly popular thanks to a combination of beautiful physical design and easy-to-use software. Apple is arguably the best in the world in this regard.

This has helped develop the company's brand, which is perhaps its biggest strength. The Apple logo and moniker resonate well with consumers across the globe, maybe more so than any other business. This has supported premium pricing over the years.

Integrated hardware and software make up Apple's ecosystem. Because everything works so well together, consumers are disincentivized to leave to competing products and platforms. The ecosystem makes Apple's devices and services sticky among consumers, something other companies can only dream about.

Another clear reason that points to Apple's superior business is just how financially sound the enterprise is. Apple's net profit margin has averaged a tremendous 24.3% in the past five years. It raked in $229 billion in operating cash flow in total in fiscal 2023 and 2024. And it currently has a net cash position of $45 billion. This all supports management's plan of returning massive amounts of capital back to shareholders via dividends and buybacks.

Set the right expectations

The market has taken a hit in recent weeks, and Apple hasn't been immune from this volatility. Its shares are down 17% from their peak, which was established in December last year. You might think the valuation is now at a compelling level, but I don't believe this is the case.

As of this writing, the stock trades at a price-to-earnings (P/E) ratio of 34. While this is lower than it was about three months ago, it's undoubtedly still a very hefty price tag for prospective investors to pay. In the past 10 years, Apple's P/E multiple has averaged just under 23.

It would be completely fine for investors to pay that type of elevated multiple if Apple were registering strong growth. However, this isn't what's been happening. On a trailing-12-month basis, Apple's revenue is barely higher than it was exactly nine fiscal quarters ago. This is not a trend investors want to see.

The company hasn't been able to drive healthy top-line growth recently. That's probably partly because consumers aren't upgrading to the newest iPhone models, a product that represented 55% of overall revenue in Q1 2025 (ended Dec. 28, 2024), as frequently as they did in the past. This is looking to be the case even with the introduction of Apple Intelligence.

Looking ahead, it's difficult to say if Apple's growth will get supercharged. Paying 34 times earnings, though, leaves investors with no margin of safety.

It's also worth mentioning that investors shouldn't hope that a single stock could set them up for life. Putting all your eggs in one basket is not the right idea. Instead, it's best to build a diversified portfolio of high-quality stocks that can generate wealth over the long haul.

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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.