Apple: $500 Billion US Investment Is a Tariff-Avoiding Ploy That We Expect to Succeed

Key Morningstar Metrics for Apple

• Fair Value Estimate: $200.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

Apple AAPL announced $500 billion in cumulative investment in the United States over the next four years, its largest-ever commitment. This includes a new artificial intelligence server manufacturing facility in Texas and increased spending on semiconductor development and manufacturing in the US.

Why it matters: We believe Apple’s spending plan is a direct strategy to earn an exemption from tariffs on imports from China. Close to 70% of iPhones are manufactured in China, meaning tariffs could have a large impact on the firm’s financials.

• Apple earned exemptions from tariffs under the first Trump administration, and we believe it is on a path to do so again. This could also help the firm avoid potential tariffs on countries besides China.
• Apple’s $500 billion commitment shows a focus on generative AI and proprietary semiconductor design expertise. We see Apple’s silicon design as highly moaty, most recently exemplified by the new C1 cellular modem, which displaced Qualcomm in the iPhone 16e.

The bottom line: We maintain our fair value estimate of $200 per share for Apple, as we maintain our base-case assumption for minimal impacts from tariffs. We see the shares as overvalued. We believe investors need rosy iPhone growth assumptions to justify Apple’s valuation.

• In our view, long-term iPhone revenue growth is slowing, with headwinds from a mature smartphone market and higher competition out of China. We believe the current stock price implies close to double-digit medium-term growth, compared with our forecast in the mid-single digits.