Apple is also one of the few companies that investors still seem to know, but when it is explored closely, it still seems to have new layers. During a year of disproportionate markets, congested technology trades, and the growing doubt about valuations, the performance of Apple has not been aided by an aspect of hype, but rather to execution. This firm has provided its adjusted increase in earnings per share of 13 percent, a fact that confirms its image as a firm that builds upon itself even when the overall market mood is risky.
The act was mentioned in the fourth-quarter 2025 investor letter of Wedgewood Partners, which was published at a time when the company itself admitted to having a tough year. The long-standing commitment to high-quality businesses that Wedgewood Partners has had caused it to enter the year of 2025 with high expectations but left the year with a more grounded view. In the fourth quarter, the composite portfolio of the firm fell by 1.8 percent, which was lower than such major indices as the S&P 500, Russell 1000 Growth Index and Russell 1000 Value Index. During the entire year, the difference continued growing, with a more modest gain being registered by Wedgewood as wider markets soared.
The letter was very frank on what was causing this poor performance. It was caused by weak stock selection, the tendency of natural valuation of long-term winners, and structural underweight position in artificial intelligence-oriented stocks. Notably, the company also recognized that most AI investments were already clustered, and with overstretched valuation, disciplined decision-making was under pressure. It is against this backdrop that Apple has not been a speculative bet, but it has been a stabilizing factor in the portfolio.
Apple is not a new victim of scrutiny by investors. It operates on a scale that is very few companies can rival as it is an American multinational company that designs and sells smartphones, personal computers, tablets, wearables, and an ever-expanding ecosystem of digital services. By the mid-January 2026 the market capitalization of Apple was unbelievable 3.76 trillion, and the company shares are trading at 255.52. Although the stock went down by 5.7 percent in the last 1 month, it had still appreciated more than 11 percent over the last 52 weeks which is indicative of a longer time horizon trust in the company fundamentals as opposed to the short term fluctuations in the price.
The size of Apple was not the only point worth mentioning in the letter of Wedgwood, but the nature of its earnings growth. Apple grew when the market was commonly driven by growth in revenues through aggressive pricing or even temporary trends. Apple growth was supported by a more fundamental change that is being effected in the business. Services, which were considered as an adjunctive business unit to hardware, have developed to be a central source of earnings. In the last year, Apple services business had over 100 billion in revenue, which is a feat that alone would have made it a fortune 100 company.
Wedbush Morgan Securities reviewed the role of Apple to portfolio performance with the following statement, which is the core of the current trends of the company:
Apple Inc. (NASDAQ:AAPL) contributed to performance as adjusted earnings per share increased +13% as increasing revenue in its services business increased +15% and quickened compared to the prior quarter and produced more than $100 billion in revenue in the last 12 months. In addition, the Company steered to robust rise in its revenues in its highest quarter of the year, which are ahead of eighty percent, as its iPhone revenues rose by two digits, as the Company had a good demand, following its rollout of a number of new models in the last quarter. A long history of consistency in implementing hardware and software upgrades, as well as the growing levels of proprietary silicon content, gives Apple consumers a consistent, high quality user experience, which must continue to spur adoption and trade-up.
It is not at all a coincidence that it is so consistent. The Apple approach has always been vertical integration, where both the hardware and software are controlled in such a manner that a slight improvement will be felt by the end-users. These are improved over time, and it is good to motivate customers to upgrade devices, subscribe to services, and stay in the ecosystem. It is not a method that creates spikes in growth, and that is why it does create long-lasting revenue streams that will support even during periods when consumer spending becomes tight.
This dynamic is reflected in the holiday quarter outlook by Wedgewood. This was followed by strong two-digit increase in iPhone revenues as new models were introduced that focused on performance improvement, camera improvement and better integration with Apple custom silicon. When competitors tend to rush to bring radical changes, Apple is a refinement company. Every version is based on the previous one that makes the process less frustrating to users yet makes the switching cost higher quietly.
This predictability has actual value to an investor. When speculative segments are in the news in certain years, such as 2025 and then right after the readjustment, then companies with replicable execution shine. The revenue of Apple services, in particular, can be viewed as a balancing factor to the cyclical hardware sales. Digital content, subscriptions, app store charges, and cloud storage bring about recurrence of revenues that smooth the earnings and improve visibility.
Meanwhile, Apple does not go without troubles. The regulatory review of app store practices remains in various regions. The smartphones market is currently facing stiff competition, particularly in the economically sensitive markets. At a multi-trillion-dollar level, valuation does not provide much space to make an error. The above aspects explain why strong fundamentals may not assure continuous appreciation of stocks price.
But this is exactly the reason why the recent performance of Apple is important. This level of growth performance of 13 percent adjusted EPS will need the discipline of its operations, pricing power and continued demand. It is also an indication of how the management is able to channel capital efficiently between innovation and shareholder returns. In the case of long-term investors, the qualities carry greater weight than the breakthroughs that make headlines.
The cautious tone of Wedgewood Partners with respect to future market conditions highlights an even greater change in investor psychology. With enthusiasm on AI ending, and the value normalization process, the focus would be back to businesses that can actually produce cash flows and demonstrate their ability to withstand cycles. That is more easily said to apply to Apple than to most.
