2025 hasn’t treated Apple (AAPL) stock well, and with a YTD loss of nearly 20% as of June 6, it is the second-worst performing constituent of “Magnificent 7.” 

Apple has looked quite shaky this year and didn’t fully participate much in last month’s rally in tech stocks. Wall Street analysts have also been turning bearish on the Tim Cook-led company, and things are no different from last year when it faced a flurry of downgrades. Last year, Apple headed into the Worldwide Developer Conference (WWDC) battling a perception that the company was lagging behind its Big Tech peers in artificial intelligence (AI). WWDC 2024 helped shed that perception and was followed by analyst upgrades and upward movement in AAPL stock.

What’s Wrong with Apple Stock

I would argue that Apple’s outlook looks much dimmer heading into WWDC 2025 than it did last year, when it was seen as missing out on the AI opportunity. This time around, the issues are much more widespread and are more than just perception. Here are some of the issues that the Cupertino-based company is grappling with.

Supply Chain Strategy: Over the years, Apple diversified its supply chain away from China, which came in handy after President Donald Trump imposed steep tariffs on China. The company started sourcing iPhones into the U.S. from India, which is subject to a 10% tariff, a third of what imports from China attract. However, Trump has called upon Apple to manufacture its products stateside, threatening the company with 25% tariffs. While we don’t know whether the president will actually go ahead with these tariffs, his comments against Apple have led to considerable uncertainty.

Apple’s AI Initiatives: There is also a question mark on Apple’s AI strategy after the slow rollout of Apple Intelligence features and the delay in the Siri upgrade. Moreover, the company is yet to launch the Apple Intelligence features in China, which is its second biggest market.

OpenAI’s Entry into Hardware and Race for the Next Computing Platform: OpenAI has ventured into hardware and acquired Jony Ive’s startup, io Products. Ive was a former chief design officer at Apple, where he helped design the iPhone. The race for the next computing platform looks open, and while Apple has the lead with its over 2 billion installed devices and its enviable ecosystem, the challenge from the likes of OpenAI or, for that matter, Meta Platforms (META), whose CEO Mark Zuckerberg is betting on glasses as the next big computing platform, cannot be ignored.

Competition from Chinese Companies: Apple lost its position as the biggest smartphone company in China last year as domestic Chinese companies, especially Huawei, stepped up their game. Chinese smartphone companies are no longer only competing on price but are offering features matching – and in some cases, better – than the iPhone. I fear Apple might have lost its pole position in China for good, given the rising preference for domestic brands among Chinese consumers.

Challenges in Services Business: Over the years, Apple’s Services business has grown considerably and accounted for 28% of the company’s revenues in the most recent quarter, with gross margins rising to a record high of 75.7%. However, that revenue stream faces serious headwinds after District Judge Yvonne Gonzalez Rogers ruled that Apple needs to loosen its stringent App Store rules and stop collecting fees on purchases made outside apps. Apple had to reinstate the Fortnite App shortly after the ruling. Apple’s lucrative revenues from Play Store fees are at risk if more App developers start bypassing its payment ecosystem.

Should You Buy AAPL Stock Ahead of WWDC?

Apple needs to answer some very tough questions, and I doubt these can be addressed at the WWDC. While the event could be an incremental positive for AAPL stock, it won’t be enough to buoy sentiment that is being dragged down by multiple weights. 

From a valuation perspective, Apple trades at a forward price-earnings (P/E) multiple of 28.58x, which makes the risk-reward unattractive, at least for the short term.