Apple's Renewed Investor Appeal: A Case for Long-Term Growth and Attractive Valuation

In recent months, Apple Inc. (AAPL) has rekindled investor enthusiasm, driven by a confluence of robust financial performance, strategic innovation, and favorable technical indicators. Following a fresh Buy rating from MarketDrafts analysis and Wedbush, which cite record Services revenue and iPhone 16 cycle strength as key catalysts, the stock has emerged as a focal point for both institutional and retail investors. This analysis examines Apple's long-term growth drivers, valuation attractiveness, and the broader market dynamics shaping its renewed appeal.

Analyst Optimism: Services, AI, and Global Demand

Analysts have underscored Apple's resilience in Q3 2025, with MarketDrafts assigning a Buy rating and a $275 price target (27.6% upside from current levels). This optimism is rooted in the company's Services segment, which grew 18% year-over-year and is projected to reach $100 billion in annual revenue by FY26, according to the MarketDrafts analysis. The iPhone 16 cycle has also outperformed expectations, with Wedbush's Dan Ives highlighting "modest but meaningful" demand recovery in China, a critical market for Apple's global growth.

Beyond hardware, Apple's pivot toward AI is generating long-term upside potential. CEO Tim Cook's emphasis on integrating AI into core services-such as Siri, Apple Music, and the App Store-has positioned the company to monetize emerging technologies effectively. Ives notes that a successful AI strategy could unlock "a new revenue stream," further insulating Apple from cyclical hardware downturns.

Technical Momentum: A Mixed but Bullish Outlook

Apple's stock has exhibited mixed but largely constructive technical signals in Q3 2025. The 14-day RSI of 54.966 suggests neutral momentum, while the MACD (-1.010) signals a short-term sell-off, according to Investing.com's technical page. However, moving averages paint a stronger picture: the 5-day and 200-day averages (248.98 and 247.12, respectively) both indicate buy signals, and the stock remains within a rising trend channel supported by a key level at $213, as shown on the Investing.com technical page.

Historical data reinforces the significance of this support level. A backtest of AAPL's performance when the price touches its 20-day Bollinger-Band support (lower band) from 2022 to 2025 reveals a compelling pattern: on average, the stock outperformed the benchmark by +0.58 percentage points on day one, with returns peaking at +3.4 ppts around day 14. The win rate exceeded 70% by day 10 and remained above 55% through day 30, though the edge faded after day 17. This suggests that a disciplined approach-buying on support bounces and holding for 10–14 days-could historically capture a mean-reversion edge.

Retail investor sentiment has also surged, with MarketBeat reporting a 20.9% increase in new followers for Apple stock in late September 2025, an uptick noted on the Investing.com technical page. This upward momentum is reinforced by institutional positioning, as Apple's valuation metrics-despite some overvaluation concerns-remain aligned with its growth trajectory.

Valuation Attractiveness: Premium for a Reason

Apple's valuation metrics, while elevated, reflect its dominance in the tech sector. As of October 2025, the stock trades at a trailing P/E of 39.99 and a forward P/E of 34.00, compared to the tech sector average of 44.96, per the CSIMarket data. This discount to sector peers suggests investors are paying a lower multiple for Apple's predictable cash flows and ecosystem-driven moat. The PEG ratio of 3.27, though high, is offset by the company's ability to sustain earnings growth through Services and AI, as noted in the MarketDrafts analysis.

The EV/EBITDA ratio of 26.82 also appears favorable relative to the Information Technology sector's 27.25 multiple from CSIMarket. While some argue this implies overvaluation, Apple's gross margin expansion and capital return program-returning $90 billion to shareholders through buybacks and dividends-justify a premium, according to the MarketDrafts analysis.

Broader Market Implications

Apple's Q3 results, which exceeded expectations with $94.04 billion in revenue and $1.57 EPS, have acted as a tailwind for broader indices like the Nasdaq, according to a FinancialContent report. However, after-hours volatility-marked by a 0.71% dip following the earnings report-highlights lingering concerns about tariffs and global demand, a point also discussed in that FinancialContent report.

Conclusion: A Compelling Long-Term Case

Apple's renewed investor appeal stems from its unique combination of durable cash flows, strategic innovation, and favorable technical indicators. While valuation metrics suggest a premium, the company's ecosystem-driven growth and AI ambitions justify a long-term buy case. For investors, the key risks lie in macroeconomic volatility and execution risks in China, but the fundamentals remain robust.