Apple (AAPL) stock has surged more than 20% over the past three months. That easily trumps the S&P 500, which gained 3.3%, and rivals such as Google (GOOG) and Microsoft (MSFT).

Apple investors, though, shouldn’t start celebrating just yet.

First, Apple stock has surged because the company announced a gargantuan effort to return a whopping $130 billion in cash to shareholders through stock repurchases and dividends. AAPL is ratcheting up its share repurchases to $90 billion from $60 billion. It has also undergone a 7-for-1 stock split, which is making the stock more affordable than it’s been in years.

Investors, though, need to recognize these moves as financial engineering. Basically, CEO Tim Cook is treating investors like kittens, and has given them a shiny tinfoil ball to bat around. But those investors aren’t going to be distracted forever.

Apple stock has delivered consistent growth, but Wall Street expects spectacular results. Revenue in the current quarter is expected to gain 7% to $37.9 billion in the current quarter. The company’s rivals, however, are doing considerably better. Facebook (FB) is forecast to boost quarterly sales by 54%, and even Microsoft, the antithesis of cooler-than-thou Apple, is forecast to boost sales by 16%.

Apple stock is cheap, trading at a price-to-earnings multiple of 15. But Wall Street analysts think AAPL is almost at a gas, trading near its average 52-week price target of $92.88. Their skepticism is understandable, as Apple stock has plenty of challenges ahead.

Apple Stock Faces Headwinds

First, tech pundits have whipped themselves up into a frenzy about the yet-to-be launched iPhone 6. Brian White, a Cantor Fitzgerald analyst and one of Wall Street’s biggest bulls on Apple stock, recently predicted that Apple will launch a 4.7 inch iPhone 6 in September and a 5.5 inch version of the smartphone the following month. White is basing his forecast on information he gleaned from his annual tip to Asia, where he has sometimes found big scoops. But as BGR noted “Other times, he comes back with big misses.”

Unless the iPhone 6 blows away reviewers and the competition, Apple stock won’t budge much from present levels. Apple’s rivals in the Android market aren’t standing still, either. According to market analyst ABI Research, the Google operating system controlled 80% of the smartphone operating system market and 44% of the mobile phone market overall. Android is also making inroads in the tablet market, which Apple more or less invented with the iPad. According to Gartner, vendors sold 195 million tablets in 2013, and — as with the iPhone market — Android now holds the top spot in the market, accounting for some 62% of sales to Apple’s 36%.

Given that Android’s position has been so dominate for so long, Apple may have little choice but to do something that would make Steve Jobs turn over in his grave: Compete on price.

Before you start shouting, consider this: People looking for older iPhones can get them for next to nothing with a service contract. Consumers can also trade their older models at Target (TGT) and other stores for credits that give them a new phone for basically nothing. When the iPhone 6 comes out, look for CEO Tim Cook to offer some pretty sweet deals. He isn’t going “Crazy Eddie” but he will keep the phone competitive. He has little choice.

Of course, Apple still has plenty of tricks up its sleeve. There’s the much-hyped iWatch, which sounds interesting in theory, although specifics are hard to come by about this wondrous product. MacRumors.com reports that the device may be able to “track health-related metrics” such as calories burned and steps taken. If that sounds familiar, its because the FitBit that’s surging in popularity, does all those functions now. For the iWatch to make a meaningful difference to Apple’s bottom line, it will have to blow away the competition.

But Apple may have bigger plans for health care than just the iWatch. Media reports have indicated that the company has met with officials at the Food & Drug Administration to discuss the company’s interest in health care, presumably related to its latest fitness campaign. That has the potential to be a huge money-maker for the company if it can develop something truly innovative … but that’s a big “if.”

For most investors, the risks of owning Apple (e.g. competition from Android) far outweigh the rewards (e.g. iWatch, health care). Just remember that people have lost loads of money in the past few years while waiting for the next big thing from Apple. I’m not saying it won’t happen … but don’t expect Apple stock to jump again anytime soon.

As of this writing, Jonathan Berr did not hold a position in any of the aforementioned securities.