Apple Stock Price: Is the 28% Premium Justified?

Apple's stock price has surged over the past five years, delivering a 112.7% return, but current valuation checks suggest investors are now paying a premium relative to its intrinsic value estimate.

The Discounted Cash Flow (DCF) model estimates Apple's intrinsic value at about $254 per share, compared to its current price of around $325, implying the stock is overvalued by roughly 28.2%.

This valuation gap can be attributed to recent AI-focused hardware and services launches, which may support future cash flows but also introduce uncertainty due to legal disputes and supply constraints.

On the other hand, a P/E ratio analysis suggests Apple's stock price is about right, with a premium of only 2.5% above its estimated fair value of 35.2x earnings.