Prediction: Apple Will Be the Worst "Magnificent Seven" Stock to Own Between Now and 2030

If you have a 401(k) or an individual retirement account (IRA), you probably own some **Apple **(AAPL 1.45%) stock – either directly or through ownership of a mutual fund or exchange-traded fund (ETF). Therefore, just about everyone has a reason to be concerned about Apple’s performance, because its poor performance could cost you money.

So, let’s explore why Apple is poised to underperform its big tech peers and what investors can do to prepare themselves.

Image source: The Motley Fool.

The threats to Apple’s standing

First, we must cover the storm clouds on the horizon. In a nutshell, Apple is facing three key challenges:

• An aging signature product
• Increasing competition
• Global regulatory, supply, and trade headwinds

Expand

NASDAQ: AAPL

Apple

Today’s Change

(-1.45%) $-3.66

Current Price

$249.23

Key Data Points

Market Cap

$3.7T

Day’s Range

$248.08 - $255.45

52wk Range

$169.21 - $288.62

Volume

2.9M

Avg Vol

47M

Gross Margin

47.33%

Dividend Yield

0.42%

Let’s start with its aging signature product: the iPhone. Next year will mark the 20th anniversary of the iPhone. When it was launched, the iPhone was revolutionary. But 20 years on, each successive iPhone is less compelling than the last. Simply put, the iPhone market is saturated. The company now increasingly relies on price hikes for growth. And since iPhones still account for about 50% of Apple’s revenue, that matters.

Then there’s the competition. While Apple is still king of the U.S. market, with approximately 60% market share, China is another story. There, Apple holds about 25% market share, with competitors like Huawei, Vivo, and **Xiaomi **splitting much of the remaining market. If Apple’s market share in China were to deteriorate, it could spell trouble for Apple stock.

Last, there are the regulatory and trade risks. Apple’s biggest bright spot is its high-margin services segment, which includes its App Store. However, global regulators have zeroed in on the App Store, threatening to derail Apple’s best catalyst. European regulators have forced Apple to allow alternative app stores to operate on its devices; the U.S. Department of Justice is suing Apple on antitrust grounds.

What’s more, there are the overarching threats to Apple’s supply chain and the perils caused by tariffs. Apple, with massive offshore manufacturing facilities and suppliers, could become a casualty if the simmering trade war with China were to boil over.

The changing nature of Apple stock

None of this means Apple’s stock is going to fall off a cliff. However, investors may need to recalibrate their expectations. Gone are the days when Apple was a leading growth stock. It’s now transitioning to a _value _stock, although it is still priced like a _growth _stock.

AAPL PE Ratio data by YCharts

Take Apple’s price-to-earnings (P/E) multiple, for example. Apple’s P/E ratio stands at 31. That’s well above its 10-year average of 25, even though the company’s diluted earnings-per-share (EPS) growth has averaged about 16% over the last decade. Similarly, Apple’s revenue growth has hovered around 7% for 10 years, even though it ticked up in recent quarters – mainly due to services and tariff-fueled iPhone panic-buying.

Again, these figures aren’t catastrophic, but they are indicative of a company that is falling behind in the world of big tech stocks – where high growth rates and fat margins are the norm thanks to the rise of artificial intelligence (AI) applications.

How to protect yourself

So, what’s an investor to do?

One path forward for investors is to slowly redeploy some capital from Apple into other, more innovative “Magnificent Seven” stocks. **Meta Platforms **currently boasts revenue growth of 24%; **Alphabet **has grown diluted EPS at 30% in its most recent quarter. Moreover, Nvidia, with its best-in-class AI chips, is not only the new hardware stock king – it’s also the world’s largest company by market cap, having unseated Apple last year. All of these companies stand to benefit immensely from AI-led innovation.

For other investors, it may be best to redeploy capital out of the Magnificent Seven altogether – perhaps by trimming Apple and adding some Invesco S&P 500 Equal Weight ETF, or a defensive play like the Consumer Staples Select Sector SPDR Fund.

At any rate, investors with significant exposure to Apple shouldn’t panic. The stock isn’t poised for an imminent collapse. However, I do believe Apple faces serious challenges in the years ahead – which is why investors should be prepared for Apple to be the worst-performing Magnificent Seven stock over the next four years.