This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Apple (NASDAQ: AAPL) is a tech titan that needs no introduction. It's one of the most iconic -- and beloved -- brands on the planet, and it was the first publicly traded stock to reach $1 trillion, $2 trillion, and $3 trillion in market capitalization.
However, Apple stock has lost a bit of its luster this year, with tariff fears and a federal antitrust lawsuit weighing on investor sentiment. As of time of writing, the stock is down 14.5% in 2025, and it's down 3% over the past 12 months.
Is this a good time to pick up Apple shares at a discount? Here are three reasons why that could be a strong move for your portfolio.
Apple is a cash machine
While Apple stock may have temporarily lost some of its shine, Apple the company is still printing money -- and sitting on a mountain of cash. That's the first reason to buy Apple like there's no tomorrow.
In its fiscal 2025 second quarter, which ended March 29, Apple reported $95.4 billion in revenue, up 5% from the year-ago period. Diluted earnings per share (EPS) increased 8% to $1.65, a record high for Apple's January through March quarter.
In Q2, Apple's operating cash flow -- the cash generated from its core business operations -- was $24 billion. While that was about $3 billion less than what Nvidia generated in its fiscal 2026 first quarter, it's still an enormous cash stream that gives Apple the flexibility to invest in R&D, make strategic acquisitions, and reward shareholders.
And rewarding shareholders is where Apple really shines. Since fiscal 2012, Apple has returned nearly $1 trillion to shareholders through stock buybacks and dividends -- likely more than any company in history. In Q2 2025, Apple's board rubber-stamped another $100 billion in stock buybacks.
While Apple might not be the flashiest tech player in a market that's fixated on AI plays right now, it's still a cash-generating powerhouse with a shareholder-friendly track record that's unmatched by its peers.
Apple's services business is booming
The second reason to pile into Apple stock is its services business, which includes Apple Pay, Apple TV+, iCloud, and Apple Fitness+. In Q2, revenue from services jumped 12% to $26.6 billion, a record high for the company. While that was less than half the revenue from iPhone sales, services is Apple's most profitable segment, with a gross margin of nearly 76% in the second quarter -- double the gross margin for hardware.
Apple now boasts more than 1 billion paid subscriptions across its services -- a staggering figure that points to the strength and stickiness of its ecosystem. This is predictable, high-margin revenue that can smooth out the ebbs and flows of hardware sales. But it also has the potential to play an increasingly larger role in Apple's long-term growth, especially if Apple can successfully integrate generative AI into its services and create experiences that keep users even more deeply embedded in the Apple ecosystem.
The AI opportunity
I'd be remiss if I didn't mention that Apple has been playing catch-up in the AI race, and that's likely one reason the share price has been under pressure this year. The company launched Apple Intelligence -- a new suite of generative AI features for iPhone, iPad, and Mac users -- in October 2024 and unveiled new AI capabilities in June. But Apple's plans to release a new AI-powered Siri with in-house technology by spring 2025 have been pushed back to 2026.
In a recent blog post, analysts Brian Baker and Gene Munster asserted that Apple's best option might be to acquire Perplexity, an AI-powered answer engine that's developing an agentic AI browser called Comet.
"Perplexity's strengths in AI search could help Apple develop a real alternative to Google Search -- especially useful with the FTC potentially threatening Apple's current multibillion-dollar default search deal with Google," the analysts wrote. "This could fast-track a seamless, AI-native search experience deeply tied into the OS across all Apple devices."
Whatever route Apple takes, the company is approaching the AI challenge from a position of strength, in my opinion. With its rock-solid core business and massive cash stockpile, Apple can afford to take its time to get AI right -- and make a strategic acquisition if necessary.
Apple is trading at a reasonable valuation
The third reason to buy Apple stock is its valuation, which stacks up favorably against other members of the Magnificent Seven.
AAPL PE Ratio (Forward) data by YCharts
On a forward basis, Apple is trading at a price-to-earnings (P/E) ratio of 29.7, which is lower than that of Nvidia, Tesla, Microsoft, and Amazon and slightly higher than Meta Platforms at 28.1. That seems like a fair valuation for a company with unparalleled brand loyalty, prolific cash flow, and a growing ecosystem of high-margin services.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
