Apple's biggest threat is its own devices, not Android, analyst Craig Moffett says

what happened

Apple shares trade near record levels ahead of its fiscal fourth-quarter report, which the company will publish after the closing bell on Monday. MoffettNathanson analyst Craig Moffett, as reported by Stocktwits citing a CNBC interview, sees a less obvious risk: investors treat Apple as the 'safe choice' among mega-cap stocks, which has pushed its multiple to roughly 36 times forward earnings.

By his calculation, the earnings yield is about 2.8%, roughly half the yield on Treasuries. He also said higher memory costs have lifted the price of Apple's base devices by about $100, while US wireless carriers have not increased promotions to offset that. The competition, in his view, comes less from Android than from the iPhone customers already own, since buyers may simply hold on to their devices longer.

According to Fiscal.ai data, Wall Street expects earnings per share of $1.98 on revenue of $113.25 billion. Retail sentiment on Stocktwits is 'extremely bearish', while the stock is up about 27% year to date.

why it matters

For the market, the question is less whether Apple posts another solid quarter and more whether growth can justify the premium investors already pay. A high valuation leaves the stock sensitive to any disappointment in results. Because Apple is among the largest companies in the US market, its report could also shape sentiment across the tech sector.

market impact

AAPL: rich valuation and iPhone demand risks add pressure if the report disappoints

tags

instruments