Apple Stock: Wall Street Is Worried. Should You Be, Too?

Citizens are walking past an Apple store in Shanghai, China.

(Image credit: Getty Images)

Apple (AAPL) fell more than 9% on Thursday, April 2, after President Donald Trump unveiled sweeping reciprocal tariffs after Wednesday's close. Shares dropped another 7% on Friday as the sell-off continued to a second day.

This is the latest bout of technical troubles the once-high-flier has faced recently, with shares of AAPL down nearly 25% for the year to date.

Why is Wall Street so worried about Apple stock – and should you be too?

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Trump tariffs create a major headwind for Apple stock

Apple's price struggles this year have come amid broader risk-off sentiment from investors. Concerns about slowing iPhone sales and consumer demand didn't help matters.

These worries are being compounded following the latest Trump tariff news.

"Both the magnitude of 'reciprocal' tariffs imposed per country and the set of countries they were imposed on were larger than many had reasonably anticipated," notes UBS Global Research strategist Bhanu Baweja.

The 10% universal tariffs "is an added shock," Baweja says. This, he believes, has the potential to "considerably worsen" both domestic and global economic growth in the year ahead.

Additionally, Apple relies "on extensive international manufacturing, with the large majority of finished goods sold into the U.S. assembled in (Southeast) Asian nations," which leaves it one of the worst-positioned to absorb the tariffs, notes Morgan Stanley analyst Erik Woodring.

Woodring believes that Apple could incur an added tariff cost of more than $38 billion annualized, which works out to roughly 26% of EBIT (earnings before interest and taxes) for fiscal 2026.

He adds that the "heightened uncertainty" will also likely elongate sales cycles.

CFRA Research analyst Angelo Zino says he is waiting for more clarity from both Apple's management and the Trump administration on potential next steps.

Still, Zino lowered his price target on AAPL stock to $235 from $270, explaining that he sees "downside to both margins and earnings if the reciprocal tariffs hold. We also see risk that China and others could retaliate, targeting technology companies like AAPL."

Despite Wall Street's worries, most analysts remain in Apple's corner. Of the 45 analysts who cover AAPL stock tracked by S&P Global Market Intelligence, 21 say it's a Strong Buy, seven call it a Buy, 13 have it at Hold, and four say it's a Sell or Strong Sell.

This works out to a consensus Buy recommendation, though with slightly less conviction than at the start of the year.

What should investors do about Apple stock?

Ups and downs are part of being invested in the stock market, and investors who have held on to their Apple shares over the long term have come out on top.

Even though Apple is one of the worst Dow Jones stocks so far this year, shares have averaged an annual total return (price change plus dividends) of 28.2% in the past five years. The S&P 500, meanwhile, has generated an average annual total return of 19.4% in that same time frame.

Remember that the idea is to buy low. Stocks are cheaper today than they were yesterday. They might get cheaper tomorrow, but the long-term trend has always been up and to the right. That's why dollar-cost averaging works for investors.

As CFRA's Zino reminds us, Apple is better positioned than most hardware vendors in terms of free cash flow and balance sheet strength, and its growing Services business should help buffer downside for now.

In Apple's most recently reported quarter, its Services division accounted for 21% of total revenue.

With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.