Apple (AAPL -0.65%) has been a fantastic stock to own recently, up 227% in the past five years and 36% just in 2023 (as of Aug. 25). These gains easily beat the Nasdaq Composite Index. But shares are down about 10% since the start of August.

Nonetheless, bullish investors hope this is just a temporary setback and better days are ahead. Apple is already the world's most valuable company, but can the stock reach $250 per share by the end of this year? That would translate to a roughly 40% rise from today's price. 

Based on Apple's recent performance, I don't think the outcome is impossible. However, I do think it's unlikely. Here are three reasons why investors should temper their expectations.

Slowing growth

In the most recent quarter (Q3 2023 ended July 1), Apple generated revenue of $82 billion. That's a massive figure, to be fair, but it represented a more than 1% year-over-year decline. This also comes on the heels of a sales drop in the previous two quarters. These trends are notable because, between fiscal 2019 and fiscal 2022, Apple saw its sales jump at a compound annual rate of 14.9%.

Apple plans to release a new upgrade for the iPhone later this year. Maybe that product introduction can boost consumer demand. But investors must come to terms with an obvious reality. With trailing-12-month revenue of $384 billion, a valid question is how much Apple can really expand in the years ahead. If the current quarter's sales figures disappoint shareholders, the stock won't hit the $250 mark by the end of the year.

Expensive stock

Thanks to its tremendous outperformance, Apple's valuation has outpaced its earnings growth. The stock trades at a trailing price-to-earnings (P/E) ratio of 30. That's much more expensive than where shares sold for at the start of this year -- not surprising, given the rapid ascent in 2023.

The stock is also expensive from a historical perspective. In the past five years, Apple's average P/E multiple was 25. Shares are currently on the premium side of the equation, which is even more alarming, given what I discussed above about slowing growth.

The current valuation doesn't bode well for Apple shareholders over the next four months. I believe there is more of an opportunity for investors to lose their enthusiasm -- which will crush the valuation -- than for the P/E multiple to go even higher. If the stock's performance in August is any indication, investor excitement already seems to be cooling.

Possible recession

The Federal Reserve's aggressive rate-hiking moves last year sparked widespread fears that a recession was imminent in 2023. Now that inflation has shown signs of cooling over the past several months, coupled with low unemployment and resilient consumer spending, many experts believe that a so-called "hard landing" will be avoided. They think the economy is still on strong footing, so a severe recession is becoming increasingly unlikely.

To be clear, I have zero clue about what will happen with the economy over the next three to six months. And I don't think that even the smartest-sounding economists have any idea, either. But I wouldn't completely rule out the possibility of a recession happening. I tend to agree with those who think we still need some more time for the impact of higher interest rates to be felt across the economy. 

Consequently, a weaker macroeconomic backdrop can lead to pressured consumer spending, hurting Apple's prospects. And for investors, a bearish sentiment could prevail.

The near term is always uncertain

While Apple reaching $250 per share by year-end is likely out of the question, that doesn't mean it's all bad news for investors. Apple is still one of the best businesses in the world that sells incredibly popular hardware and software products and possesses a powerful brand. That's enough reason to add the stock to your watch list, especially if the current valuation gives you pause.

If investors continue selling off shares throughout the rest of the year due to the factors mentioned above, Apple will likely end 2023 at a lower price than where it currently trades. However, it's anyone's guess what happens next. Still, given the stock's strong performance, I think it's best to temper expectations.