Apple’s Q2 earnings report was a hit, causing its stock to surge and leaving some investors wondering if now is the time to invest. However, analysts warn that Apple's valuation is cause for investor skepticism. William Power of Baird is one such skeptic. While he reiterated their Outperform rating on the stock, Power noted that “valuation vs. the S&P 500 near all-time highs, we'd also be more aggressive buyers on any pullbacks.” For context, Power noted that Apple is trading at nearly 28 times 2023's estimated earnings and 26.3 times 2024's estimated earnings, whereas the benchmark S&P 500 index is trading at roughly 19 times estimated earnings, making it the highest premium relative to the index since 2020. Furthermore, Apple now represents a record 7.1% of the S&P 500 Index, which has historically indicated a bubble.

Despite a myriad of bearish calls, including a Trade of the Week short on AAPL, some believe Apple could still be a profitable investment, especially given the strong performance of tech in this season's earnings. MarketBeat rates Apple shares as a Moderate Buy, and the company's recent impressive update and strong long-term eco-system benefits make it a possible investment opportunity. Investors must be mindful of Apple's high valuation relative to the S&P 500 and the possible dangers of being overly dependent on a handful of large-cap tech stocks driving the market.