Shareholders have renewed their interest in Apple as concerns mount about massive AI spending dragging down semiconductor and cloud-computing stocks.
On Monday, the stock climbed 1.4% to a new all-time high. During the same period, the Philadelphia Stock Exchange Semiconductor Index fell approximately 10%, while the S&P 500 rose about 3% and the tech-focused Nasdaq 100 edged up only 0.3%.
This turnaround in Apple's fortunes underscores mounting worry that the hefty investments in AI may not yield expected returns. Apple's choice to sit out the data-center spending spree is now seen as a positive, not a negative, despite the company's AI features repeatedly disappointing the market.
"There's a battle in the market, and right now Apple is benefiting because it isn't in the storm that the rest of the AI trade is in," said Mark Bronzo, who leads investment strategy at Rye Strategic Partners. "People are concerned about what kind of return hyperscalers could get from their AI spending, and there are also arguments that semis have gotten ahead of themselves. As a result, investors have gravitated back to Apple as a steady-eddy name without those risks."
Apple's avoidance of massive AI infrastructure spending has turned from a perceived weakness into a strategic advantage. While hyperscalers pour billions into data centers and chips with uncertain payoffs, Apple's disciplined capital allocation protects its cash flow and shields it from the volatility now plaguing the semiconductor sector. This divergence explains why Apple has become a safe haven for investors rotating out of high-risk AI plays.
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Even after the recent retreat driven by doubts about the durability of AI spending, the semiconductor index has still gained 78% in 2026, putting it on track for its strongest year since 1999.
For 2026, Apple has risen 17%, making it the top gainer among the Magnificent Seven group of tech giants, a collection that also features Nvidia, Alphabet, Microsoft, Amazon, Meta, and Tesla. Alphabet and Amazon have each fallen over 10% from their May highs, and Microsoft's 20% decline in 2026 puts it on track for its worst performance since 2022.
Foldable iPhone and Pricing Power
A key catalyst ahead is the expected launch of a foldable iPhone in September. According to Nikkei, Apple told suppliers to prepare for making about 10 million folding iPhones this year, up from an earlier 7-8 million.
"While Apple is immune from AI weakness, the main reason to not sell it is that it probably has a huge hit coming," said the chief investment officer at Navellier & Associates, Louis Navellier. "Pricing for the folding phone will be so strong that it will offset the memory issue on margins, and I think demand will be so strong that it will really support growth."
On June 25, Apple raised prices for its entire range of Macs, iPads, and home devices. The company is reportedly in talks to buy chips from two Chinese semiconductor firms that are on a Pentagon blacklist, aiming to secure lower-cost memory components.
In a July 7 note, JPMorgan analyst Samik Chatterjee wrote: "Long-term trends suggest that pricing has limited implications on volume opportunity over a multi-year period."
Apple's revenue is projected to grow almost 15% in fiscal 2026, concluding September 30.
Wall Street is less enthusiastic about Apple than about other big tech names. Just 61% of the analysts monitored by Bloomberg who cover Apple advise purchasing the shares. In contrast, 90% of analysts following Microsoft, Amazon, Meta, and Nvidia assign buy ratings. Apple trades at 34 times projected earnings for the next year, making it the priciest Magnificent Seven stock except Tesla, and far above its 10-year average of 23 times.
"Right now I own Nvidia but not Apple, since Nvidia's growth and valuation both look more attractive," said Rye's Bronzo. "However, so long as we're in an uncertain market, Apple's cash flow and services business will help it grind higher. If you think AI capex is going to keep expanding, buy Nvidia. But if you think it is going to slow, Apple is the better play."
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