To The Moon

Apple shares fell sharply by 5% after CEO Tim Cook warned of uncertainties surrounding tariff-related costs. Despite beating earnings expectations, Cook stated on Thursday that it remains "very difficult" to predict tariff costs beyond June. The company estimates that tariffs could increase its costs by $900 million for the current quarter alone, assuming no additional policy shifts.

Apple closed at $205.35 on Friday, marking a 3.74% decline from the previous trading day. The 52-week range was $169.21 to $260.21. While some investors might view this as a buying opportunity, I remain cautious. Personally, I’m not ready to "catch the falling knife" just yet.

Apple (AAPL)

Why I’m Not Buying — Yet

1. Tariff Uncertainty Is a Real Risk A $900 million cost burden is not insignificant, especially if trade tensions escalate. This isn’t a one-off event — it could signal prolonged margin compression.

2. Valuation Still Feels Stretched Even after the pullback, Apple’s valuation looks elevated. The current P/E ratio remains high, which suggests that much of its expected growth might be already priced in.

3. Low Dividend Yield Offers Little Cushion At this price, Apple’s dividend yield feels too low to justify holding through volatility, particularly for income-focused investors.

4. Supply Chain Exposure Remains a Weakness Apple’s deep manufacturing reliance on China increases its vulnerability to trade policy shifts and geopolitical instability. While Apple has begun diversifying production to countries like India and Vietnam, these efforts are still in early stages.

5. Buybacks Aren’t a Panacea While Apple’s stock buyback program provides price support, it doesn’t solve fundamental growth or margin pressure issues.

Adding Context: Is This Just Another Dip?

This isn’t the first time Apple has faced a macroeconomic headwind. During the 2018 U.S.-China trade war, Apple shares fell before rebounding within six months. Similarly, the COVID-19 crash in 2020 saw a brief selloff. However, today’s landscape may be different. With inflation still elevated and interest rates high, the recovery path may be slower and bumpier.

Longer-Term Bull Case — But Timing Matters

To be clear, Apple is still a fundamentally strong company. It has a fortress balance sheet, generates immense free cash flow, and enjoys one of the most loyal customer ecosystems in the world. In particular, its services segment — including iCloud, Apple Music, Apple TV+, and App Store revenue offer a margin-rich buffer to the more volatile hardware business.

However, Apple’s growing reliance on services also invites regulatory scrutiny. Antitrust pressure is rising in both the U.S. and EU, especially around App Store fees, default apps, and ecosystem lock-in. If Apple is forced to open its walled garden, it could disrupt a key monetization channel.

My Strategy

I’m waiting for a better margin of safety. If Apple were to dip below $150 — bringing it closer to a valuation more in line with moderate growth expectations — I’d start to seriously consider initiating a position. At that level, the risk-reward setup becomes far more attractive, and the dividend yield would be marginally more appealing.

Bottom Line: Apple remains a great company, but not every great company is a great investment at any price. With tariffs, valuation concerns mounting, and macro uncertainty lingering, now may not be the time to buy. Sometimes, the best move is the one we don’t make — at least, not yet.