It is hard to find a bigger Apple stock cheerleader than me. I've been writing Apple stock love poems for years. For a long time, it was easy to love the shares because they were unloved by others and it was cheap.
Until recently, when Apple stock was still trading in the low $100s and at single-digit multiples, we were buying current product categories at a discount and were not paying for future product categories.
At today's price that is not the case anymore. That is true with any company – the more expensive the stock gets, the more clairvoyance investors need to discern the company's future growth.
At Apple's size it is very hard for the company to increase its earnings significantly. Macs, iPads, and even iPhones are mature products.
The iPhone may have a few growth spurts left, but not many. It is facing an unavoidable headwind: the elongation of its replacement cycle. The iPhone improved substantially over the years, but as the i-marvels piled up, the incremental improvements that motivated people to buy a new phone every two years or so became less and less significant.
At some point the iPhone will face the fate of the iPad – its replacement cycle long in the tooth and sales stagnant and declining.
Will the iPhone's sales stop growing in 2018, or 2020? I don't know, but from a long-term perspective of the company's valuation, a few years don't make that much difference.
Services is the only segment that can grow at a double-digit rate for a considerable period of time, but it only represents 13 percent of revenue. Even the Apple Watch doesn't really move the needle.