We recently published a list of 10 Most Profitable Tech Stocks to Buy Now. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other most profitable tech stocks to buy now.
Profitability remains one of the most sought-after traits in the technology sector, yet it is also one of the most complex. It is shaped by a delicate balance of investment cycles, competition, and market perception. While topline growth often takes center stage—driving valuations and attracting top talent—sustained profitability becomes crucial as industries mature, competition peaks, and new investments become necessary for survival. In this ever-evolving landscape, technology companies have mastered the art of balancing revenue expansion with profit growth by diversifying their businesses, building vast customer ecosystems, and continuously enhancing product experiences.
Looking ahead, earnings growth will take on an even greater role in determining valuations, particularly as the breakneck pace of growth begins to slow. Investors will increasingly focus on sustainable profitability rather than just rapid growth. In a January 2024 article, Rob Haworth, Senior Investment Strategy Director at U.S. Bank Asset Management, emphasized that technology companies possess strong earnings growth potential, largely independent of traditional business cycles. He explained:
“What is not clear yet is how companies investing in AI as a way to increase efficiencies or monetize services for end users will benefit from these advancements. We’re in a consolidation phase to figure out what revenue growth will be going forward. If AI helps boost productivity, that will support not only current rising stock valuations but individual prosperity as well.”
Franklin Templeton’s 2025 Technology Outlook echoes this sentiment, predicting another year of strong growth in the sector. The report notes that the “Magnificent Seven”—a group of leading tech giants—delivered exceptional earnings in 2024, outpacing both the broader market and the tech industry itself. While these companies are expected to maintain strong momentum, The firm anticipates that the rest of the sector may start catching up in 2025.
Tech investments are projected to grow exponentially in the coming years, reshaping the profitability landscape. Emerging technologies such as artificial intelligence, quantum computing, and autonomous systems present both immense opportunities and significant challenges. Some companies will achieve sustainable profit margins through strategic pricing and ecosystem advantages, while others will struggle under the weight of fierce competition and heavy reinvestment costs. For investors and stakeholders, understanding these shifting dynamics is key to navigating the ever-changing tech sector.
Our Methodology
To identify the 10 most profitable stocks, we conducted extensive research on U.S.-listed technology and tech-adjacent companies with a market capitalization of at least $2 billion. Rather than relying solely on absolute net income, we refined our selection criteria by focusing on companies with both an operating margin and net profit margin exceeding 20%. This approach ensures that high-margin firms are not overshadowed by larger corporations with higher overall earnings. After applying these filters, we ranked the stocks in ascending order based on their trailing twelve-month net income, with the company reporting the highest net income securing the top position.
Note: All pricing data is as of market close on February 14.
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A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
TTM Net Income: $96.2 billion
Number of hedge funds: 158
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets innovative products, including the iPhone, iPad, Mac computers, Apple Watch, and Apple TV. The company also offers a range of software and services, such as the iOS and macOS operating systems, iCloud, advertising, payment services, Apple Music, and the App Store. Apple Inc. (NASDAQ:AAPL) has an operating margin of 32% and a net profit margin of 24%.
Apple Inc. (NASDAQ:AAPL)’s dedication to design, quality, and user experience has established it as a dominant player in the consumer electronics market. The company is increasingly focusing on services and software, which significantly contribute to its revenue. With a large, loyal customer base and an expanding ecosystem, Apple exhibits strong business momentum. The company’s services segment, which includes subscriptions and digital content, is expected to grow significantly, providing a steady revenue stream. As of December 2024, Apple’s installed base of active devices stood at an impressive 2.35 billion.
Apple Inc. (NASDAQ:AAPL) reported steady Q1 2025 results (FY ending September 2025), with sales growth of 4% year-over-year (YoY) which came in line with street expectations, and EPS coming in slightly ahead of expectations. Sales growth was primarily driven by the ‘Services’ segment, where sales rose 14% YoY, while the ‘Product’ segment sales grew 2%. Among products, Mac and iPad sales increased by around 15% each, but iPhone and Wearables sales were down 1%-2%. The company returned over $30 billion to shareholders in the quarter, including $3.9 billion in dividends and $23.3 billion through repurchases of 100 million shares. Additionally, it plans to expand Apple Intelligence to new markets and languages in April 2025, which is expected to drive further adoption and enhance the user experience.
On January 31, a Morgan Stanley analyst reaffirmed his Overweight rating and maintained a $275 price target for the shares. He predicts a strong launch for the iPhone SE 4, with an estimated 3 million units built in the first quarter of 2025 and a total of 15 million shipments throughout FY 2025. He attributes the anticipated success to the iPhone SE 4’s improved hardware, including a 6.1-inch AMOLED display and A18 Bionic chip, which he believes will support a starting price of $499.
Overall, AAPL ranks 2nd on our list of most profitable tech stocks to buy now. While we acknowledge the potential of AAPL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
