Is Apple Stock Going to $500? Here's What Has to Happen.

Key Points
Apple's earnings must grow at a strong clip, which becomes more difficult given its massive size.
Investors will benefit greatly if the valuation multiple expands due to improving market sentiment.
This "Magnificent Seven" stock should get to $500, but the time horizon must be extended.
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Apple's (NASDAQ: AAPL) past is defined by its winning performance. Shares have skyrocketed a jaw-dropping 953%, including dividends, in the last decade (as of March 17). This is impressive given the scale of the business. Investors are now targeting the next milestone.
Is this "Magnificent Seven" stock going to $500? Here's what has to happen for Apple's share price to effectively double over the next five years.
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Apple's profit growth needs to pick up
Between fiscal 2022 and fiscal 2025 (ended Sept. 27, 2025), Apple's diluted earnings per share (EPS) rose at a compound annual rate of 6.9%. Over the next three fiscal years, the consensus view among sell-side analysts is that this figure will expand at a yearly clip of 11.4%. This is a very upbeat outlook compared to recent history.
But there's a chance that forecast doesn't play out, as a company of this magnitude naturally starts to see slower growth. And I still believe Apple's diluted EPS must increase at a faster clip than the 11.4% estimate for the stock to have a chance at hitting $500 in five years.
The latest financial results are promising, though. During the first quarter of fiscal 2026 (ended Dec. 27, 2025), Apple's revenue jumped 15.7% year over year, driven by a robust 23.4% gain for the iPhone. This drove diluted EPS 18.3% higher.
Apple can certainly have single quarters of strong growth that coincide with innovation cycles. For what it's worth, it just announced a fresh lineup of new products that can drive consumer excitement and upgrade activity in the near term.
However, I don't believe the latest outsize gains represent a new normal of what investors should expect. On an annualized basis in Q1, Apple's revenue base totaled a whopping $575 billion. It becomes more difficult to move the needle at that size.
Market sentiment must remain healthy
Apple shares are taking a breather. They trade 11% below their record from December last year. The valuation is still not indicative of a bargain opportunity. The price-to-earnings (P/E) ratio sits at 32.2.
If investors want the stock price to reach $500 by 2031, that multiple probably needs to expand. Improving market sentiment, as demonstrated by a higher valuation, can be a powerful force for investment returns.
I wouldn't bet on this happening, though. If Apple's growth decelerates in the future, it probably justifies a lower P/E ratio. Perhaps the stock deserves to ultimately trade at a multiple between 25 and 30. This adds downside risk to the investment thesis.
Given the likelihood that diluted EPS rises at a high-single-digit or low-double-digit pace per year, coupled with the possibility that Apple's valuation ratio contracts, I'm not confident that this stock will get to $500 in five years. But over a slightly longer time horizon, that outcome seems much more probable.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and is short shares of Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.