Apple Inc. (NASDAQ: AAPL) is the world’s most valuable company based on its market cap. Based on trouble in China alone, its stock is way too expensive.

Apple is worth $3.58 trillion as its shares have risen 28% in the past year, which is about as much as the Nasdaq. That’s just ahead of surging Nvidia Corp. (NASDAQ: NVDA), which has a market cap of $3.33 trillion.

The primary challenge to Apple is its performance in China. It has struggled in a country that has almost 1 billion smartphone subscribers. That is almost three times greater than the U.S. figure.

Ming-Chi Kuo, an analyst of China’s TF Securities, recently wrote “In December 2024, overall smartphone shipments in China were about flat vs. those in December 2023; however, iPhone shipments dropped by about 10–12% YoY, reflecting a continued slide in Apple’s Chinese market share.” He also reported that Apple has been “cautious” when talking with its Chinese suppliers.

Apple’s challenge is deepened by a level of competition it does not have anywhere else in the world. According to a report by tech research firm Counterpoint, Apple’s market share is below that of China-based Vivo, Huawei, Xiaomi, Honor, and Oppo. There is little evidence that the company has gained ground on any of these. Last year, CEO Time Cook said China was “critical” to his company’s future during a speech on a trip there.

Apple’s quarterly numbers show its China struggles. Its global revenue rose 6% year over year to $94.9 billion. “Greater China” revenue was flat at $15 billion.

The company has two other primary challenges. The first is iPhone sales overall. The next quarter that it reports will have Apple 16 sales for the entire period. In the prior reported quarter, the iPhone 16 was not available.

Finally, the company’s first push into AI is its “Apple Intelligence” product. While it improves some iPhone features, it is not a major step forward. And, it will not add to enterprise sales the way it has already at Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT), which offer a wide range of products to corporate customers,

Apple’s revenue faces too many challenges and has too few opportunities for growth. That points to a stock sell-off when it posts its next set of numbers.

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