Apple Inc. (NASDAQ:AAPL) is among the market’s most high-profile winners this year, gaining 33% to outpace both the broader stock market and the hot-running tech sector. And, as everyone heading into 2017 imagined, the biggest driver of the performance in AAPL stock has been supercharged expectations for the iPhone 8 launch.

The iPhone cycle is such a strong factor, in fact, that investors ignored largely weak second-quarter results in which Apple missed on the top line, thanks in large part to disappointing sales of the iPhone — the biggest chunk of Apple revenues. Why not? After all, people must not be buying current models because they’re jacked up for the 10th-anniversary edition coming out later this year.

But I was bearish on AAPL stock heading into the Q2 report, and I remain bearish today. Apple is running out of momentum, and things could start unraveling soon.

Here’s why.

Apple Won’t Live Up To Expectations

The core issue is that all the upside in the world from the iPhone 8 has been priced into the stock, but the risks have been utterly ignored.

That’s something Pacific Crest finally pointed out earlier this week, when they downgraded a long-time “Overweight” rating on AAPL stock to “Sector Weight.” Said the analysts:

“At current levels, we believe investors are anticipating an extremely strong iPhone 8 cycle, while giving relatively little weight to risks around gross margins, elasticity, supply issues, or the likelihood for declines beyond the iPhone 8 cycle.”

That’s an exceptionally dangerous place to tread.

Apple stock trades at roughly 18 times trailing earnings, which is hardly expensive compared to the rest of this frothy market, but then, AAPL is a different beast. That P/E is actually near five-year highs in terms of Apple’s own historical valuations, which have been cyclical over the past half-decades. Valuation peaks follow valuation troughs, and back again.

The last time AAPL stock was this richly valued? Mid-2012 … and early 2015. In both cases, shares cratered over the next few months. In September 2012, Apple traded north of $95 per share, only to fall to below $60 by June 2013. Heading into summer 2015, AAPL shares were at $130 per share … and plunged to $100 a year later.

This time won’t be any different.

Apple stock very well could get a lift early on if telecoms like AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) report high demand early on, but remember, Apple is exerting more control over supply. Apple’s suppliers are already complaining about sales, which implies a short supply of iPhone 8s early on. This would limit the impact super-charged demand could have on earnings growth. so right out of the gate, there’s only so much optimism it can generate. The fever pitch will have to be sustained.

It doesn’t help that Galaxy S8 sales are on fire. Samsung Electronics Co Ltd (OTCMKTS:SSNLF) has bounced back from an exploding phone debacle, and is now regaining smartphone market share.

Thus, AAPL stock is already mostly maxed out in terms of valuation. Without much multiple expansion, investors will need to rely on underlying earnings growth to fuel shares higher.

Problem there is, analysts only see earnings growing at 11% annually over the next five years — same as in the past, and deserving of the same valuation profile … which means Apple’s multiple could be due for dramatic depression.

The iPhone 8 supercycle has plenty of risks that the market seems happy to ignore.

Bottom Line on AAPL Stock

It takes the market a while to get past the narrative. For instance, Apple was a screaming buy below $100 in April 2016, but Wall Street took a couple months to warm up to the idea. Similarly, it’s taking investors a while to really understand that this current run-up is overdone.

The iPhone 8 simply can’t live up to the sky-high expectations that investors have already used as justification to bid up shares. Even if it does meet expectations, AAPL stock doesn’t have much upside from already elevated levels.

And if it does disappoint? Apple longs could be in for some intense, familiar pain.

As of this writing, Luke Lango did not hold any positions in the aforementioned securities.