Apple (NASDAQ:AAPL) stock has been something of a dynamo over the past year, gaining more than 84%, and it's currently the market cap leader among all publicly traded stocks in the U.S., at more than $1.58 trillion. The stock is already up 25% so far this year, even as the broader market treads water.

These impressive gains have investors wondering whether the train has already left the station or if Apple still has room to run. Let's take a look at what's been driving the stock to these lofty heights in an attempt to answer this quintessential investing question: Should you buy Apple stock right now?

A front and back view of the new black Apple SE.

Image source: Apple.

Shaking off the effects of COVID-19

Apple stock initially slumped more than 30% on concerns that the worldwide closure of its retail stores and widespread stay-at-home orders would force consumers to hunker down, hanging on to their phones longer and decimating Apple's results. While those fears were well-founded, there was a silver lining to Apple's dark cloud.

The company's increasing focus on services and wearables over the past several years, coupled with its strong online sales channel, gave Apple a lifeline, even as many other retailers struggled with weak demand.

Recent results tell the tale

Apple reported is fiscal second quarter results in late April, as investors were beginning to get past some of the uncertainty resulting from the pandemic. Apple reported quarterly revenue of $58.3 billion, edging up 1% compared to the year-ago quarter, while earnings of $2.55 per share increased 4%. 

Yet underlying these tepid results were indicators of what the future may hold. The company delivered record quarterly results from Apple retail, powered by strong growth from its online store. It also coaxed a quarterly record out of its wearables, home, and accessories segment, while generating an all-time record from its services segment. This minimized the damage from the pandemic, helping Apple keep its head above water. It also highlights several of the catalysts that will help drive Apple's future growth.

Two women with their arms around each other being photographed in a crowded room.

Jennifer Aniston and Reese Witherspoon in a scene from the Apple TV+ original series The Morning Show. Image source: Apple.

A growing list of potential catalysts

One of the more compelling potential drivers for Apple in the near term is the ongoing shift to the next generation of mobile technology, commonly called 5G. Apple decided to forego the tech in last year's iPhone 11 -- even as competitors touted 5G -- because it was only available in a handful of cities. Many believe that the iPhone 12, which is expected to be released later this year, will incorporate the technology. The release is expected to result in a groundswell of demand, which some are calling a "super cycle."

Earlier this year, Apple revealed it has an installed base of more than 1.5 billion active devices worldwide, and while the company didn't provide an update for the iPhone, estimates put that number at close to 1 billion. The coming upgrade cycle could result in as many as 350 million iPhone upgrades in the coming year, according to Wedbush analyst Dan Ives, driving Apple stock even higher. 

Another factor that can't be ignored is Apple's relentless share buyback program. Just last week, RBC Capital's Robert Muller highlighted the company's capital allocation plan. "Apple remains in a league of its own when it comes to share repurchases," he said in a note to clients. Muller believes Apple will continue to buy back stock of about $70 billion annually, similar to its recent rate. If that's the case (and history shows it's likely), Apple will produce compounded earnings-per-share growth of 4% -- and that's from the buybacks alone. 

Then there's Apple's services. Over the past four quarters, the segment has generated more than $50 billion in revenue, amounting to nearly 19% of Apple's total sales -- and that could be just the beginning. Evercore ISI analyst Amit Daryanani recently calculated that Apple's services business could double by late 2024, after having doubled over the previous four years. Services is also a higher-margin business, so it will likely boost Apple's bottom line in the process.

A hand holding an iPhone paying with the Apple card using Apple Pay.

Image source: Apple.

A nod to valuation

Apple stock isn't the screaming bargain it was just a couple of months ago. The stock currently sells for about 29 times earnings, while the average for the S&P 500 sits at about 23. Apple is also trading at six times forward sales. These metrics have been driven higher by the stock's impressive recovery since bottoming out in late March.

Analysts expect Apple revenue to tread water this year, with sales growing just 1%, though estimates are much more bullish for 2021, with revenue expected to grow more than 12%. 

The seminal investing question

Should you buy Apple stock right now?

I would argue that the answer is an unqualified "yes." While the iPhone still accounts for the lion's share of Apple's revenue (nearly half in the most recent quarter), the company has focused heavily on increasing the contribution from its services business, which now accounts for nearly one-fifth of Apple's sales. Additionally, the company has a laundry list of potential catalysts that could drive the stock higher. Some even believe Apple's market cap could close in at $2 trillion later this year, about 25% higher than its current value.

The evidence is clear that Apple's ecosystem is as sticky as ever, as evidenced by the strong growth of its services. Its customers are equally loyal and with the latest line of iPhones just around the corner, the future has never looked brighter for Apple -- or its investors.