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Each week we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: Apple Inc. (AAPL).
 

Profile

Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. Its flagship products — the iPhone, Mac, iPad, Apple Watch, and AirPods — are complemented by a growing ecosystem of software and services, including the App Store, Apple Music, iCloud, and Apple TV+. The company’s vertically integrated hardware-software model delivers exceptional brand loyalty and pricing power, allowing Apple to consistently generate large free cash flows and shareholder returns through buybacks and dividends.
 

DCF Analysis

Inputs

Discount Rate: 10%
Terminal Growth Rate: 3%
WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $110B → PV: $100.0B
2026: $112B → PV: $92.6B
2027: $114B → PV: $85.7B
2028: $116B → PV: $79.4B
2029: $118B → PV: $73.5B

Total Present Value of FCFs = $431.2B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $118B:

TV = (118 × 1.03) ÷ (0.10 − 0.03) = 1,737B

Present Value of Terminal Value = 1,081B

Enterprise Value

Enterprise Value = 431.2B + 1,081B = 1,512.2B

Net Debt

Cash & Equivalents: $65.17B
Total Debt: $106.63B
Net Debt = $41.46B

Equity Value & Per-Share Value

Equity Value = 1,512.2B − 41.46B = 1,470.74B
Shares Outstanding: ~15.1B
Intrinsic Value per Share = $97
 

Conclusion

DCF Value: $97
Current Price: ~$246
Margin of Safety: ≈ –60%

Apple remains one of the most profitable businesses in history, with immense brand strength, recurring revenue from services, and strong cash generation. However, under conservative DCF assumptions, the stock appears richly valued relative to its intrinsic worth. The market seems to be pricing in continued ecosystem expansion, product innovation, and AI-driven upside. For long-term investors, Apple still represents a high-quality compounder — but not a deep value opportunity at current levels.

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