Apple has extended its chip-making partnership with Broadcom through 2031 and is launching new iPhone models including a foldable device and Ultra tier, fueling a 23.34% stock gain over the past 90 days. The move reflects investor confidence in AI-driven growth, but the stock's current price of $312.66 trades far above a widely-cited fair value estimate of $182.85, creating a sharp disagreement over whether hardware and services growth can support the valuation.
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Apple has extended its custom chip partnership with Broadcom through 2031 and is moving ahead with a broader iPhone roadmap that includes a first foldable model and an Ultra tier.
Why it matters
Apple's stock has climbed 10.97% over the past week and 23.34% over the past 90 days, driven by optimism around AI and iPhone expansion plans. However, the stock faces a valuation debate: the most widely followed narrative puts fair value at $182.85, well below the last close at $312.66, hinging on whether investors believe services and hardware growth can justify current pricing.
What to watch
Bulls point to the Broadcom deal, AI server plans, and iPhone expansion as justifying a premium price, while bears cite rich valuation and slower growth. Key risk: if Apple fails to turn AI-driven features (Apple Intelligence) into sticky, higher-margin services, or loses high-end iPhone differentiation, the bullish thesis could weaken.
Apple's extended partnership with Broadcom signals long-term confidence in custom chip development through 2031, aligning with the company's broader hardware expansion roadmap. The momentum is evident in the stock's recent gains, which reflect investor enthusiasm around AI capabilities and new product categories, particularly the planned foldable iPhone and Ultra tier. However, this enthusiasm exists in tension with a significant valuation disconnect: according to the most widely followed narrative, fair value sits at $182.85—a gap of roughly $129.81 from the last close—suggesting the market is pricing in substantial future growth in services margins and scale against a mature installed base. The narrative highlights two competing theories: bulls see the Broadcom deal and AI-driven supercycles (such as Apple Intelligence) as justifying premium pricing and new market expansion through lower-end iPhone tiers, while bears question whether hardware innovation has lost its edge and whether Apple can catch up on AI sufficiently. The key test ahead is whether Apple Intelligence and services can function as a stickier, higher-margin business engine; failure to realize this, or loss of differentiation in high-end iPhones, would undermine the case for the current valuation.
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