2.5 Billion Reasons Investors Should Be Bullish on This Trillion-Dollar Stock, and 1 Reason to Be Fearful

Key Points

• As companies report financials, investors can glean meaningful insights that strengthen their thesis.

• This dominant business continues to grow its base of active devices, giving it a phenomenal distribution advantage.

• A legendary investor sold shares in this company over several quarters, with valuation likely playing a factor.

• 10 stocks we like better than Apple ›

Earnings season is in full swing. This means that investors will have plenty of fresh information they need to analyze. This new data can result in an updated perspective on companies you have in your portfolio or on your watch list.

One of the most valuable businesses is giving investors a lot to think about on both ends of the spectrum. But it’s important to understand a key bull and bear case.

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Here are 2.5 billion reasons to be bullish on this trillion-dollar “Magnificent Seven” stock. There’s also a clear reason to be fearful.

Image source: Getty Images.

Power comes from blending the digital and the physical

“We are proud to report that we have a new record for our installed base with more than 2.5 billion active devices,” Tim Cook, CEO of Apple (NASDAQ: AAPL), highlighted on the Q1 2026 earnings call. This impressive metric underscores the extraordinary reach the business has with its products. It indicates just how popular Apple is with consumers.

These devices provide a favorable backdrop for the services segment to thrive, as people sign up for subscriptions to boost the utility of the products they own. “Our services revenue reached an all-time high of $30 billion, up 14% year over year,” CFO Kevan Parekh said.

Apple’s mix of hardware and software creates a powerful combination that makes it a special company. And I believe this will allow it to hold its own in the age of artificial intelligence (AI), even though it has lacked a sense of urgency to innovate.

Apple’s competitive position remains robust. The installed base of devices will likely keep growing. And the ecosystem will raise switching costs for people.

Buffett’s signal is a warning

Since first buying shares of Apple in the first quarter of 2016, Warren Buffett-led Berkshire Hathaway has registered a phenomenal gain on this investment. In the past decade, the stock price has increased by 1,040% (as of Feb. 3).

However, the Oracle of Omaha has been a seller of Apple shares in six of the quarters between Q4 2023 and Q3 2025. The conglomerate now owns 238 million shares, down considerably from a peak of over 900 million.

With notable profits being taken off the table, I’m sure valuation has been an ongoing concern. Apple isn’t cheap these days. The stock trades at a price-to-earnings ratio of 34.1. It’s not a value stock.

If one of the greatest investors of all time is starting to pare his position, it’s a sign that perhaps Apple isn’t as wonderful of an opportunity as it used to be. And that’s a reason to be fearful.

Should you buy stock in Apple right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.