Investors are flocking back to Apple as nervousness about artificial intelligence spending weighs on the stocks of chipmakers and cloud-computing giants.<\/p>\n
The iPhone maker\u2019s shares slumped last month in the wake of a disappointing presentation of upcoming AI features but have rallied 15% since bottoming on June 25, adding almost $600 billion in market value and pushing shares back to record territory. Over the same stretch, the Philadelphia Stock Exchange Semiconductor Index is down 7%, S&P 500 Index is up 3% and the technology-heavy Nasdaq 100 Index has gained just 1.3%.<\/p>\n
The stock\u2019s reversal reflects rising unease about the prospects for heavy spending on AI paying off, with Apple\u2019s decision not to participate in the data center arms race increasingly being viewed as an asset, rather than a liability, even though its AI offerings have repeatedly frustrated investors.<\/p>\n
\u201cThere\u2019s a battle in the market, and right now Apple is benefitting because it isn\u2019t in the storm that the rest of the AI trade is in,\u201d said Mark Bronzo, chief investment strategist at Rye Strategic Partners. \u201cPeople 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.\u201d<\/p>\n
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Despite the recent pullback over concerns about the sustainability of spending on AI computing, the semiconductor index is still up 83% in 2026, putting it on pace for its best year since 1999.<\/p>\n
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But Apple\u2019s 16% advance this year has made it the best performer among the so-called Magnificent Seven tech giants, which also include Nvidia, Alphabet, Microsoft, Amazon.com, Meta Platforms and Tesla. Alphabet and Amazon are both down more than 10% from May peaks, while Microsoft\u2019s 20% slump in 2026 has the stock on pace for its worst year since 2022.<\/p>\n
Apple\u2019s strength is all the more impressive considering the headwinds it faces from the rapid increase in prices for memory chips, which threaten the company\u2019s profit margins. In response, Apple raised prices on all Macs, iPads and home devices on June 25, which resulted in the stock\u2019s worst single-day drop since April 2025.<\/p>\n
While the hikes didn\u2019t include the iPhone, the company indicated there could be more price increases in the future. Apple is reportedly in negotiations to purchase chips from two Chinese semiconductor makers on a Pentagon blacklist in an effort to access cheaper memory chips.<\/p>\n
Analysts are optimistic that the moves will protect the company\u2019s margins and view Apple as less vulnerable than other hardware companies because its customers are less likely to balk at paying higher prices for devices.<\/p>\n
\u201cLong-term trends suggest that pricing has limited implications on volume opportunity over a multi-year period,\u201d JPMorgan analyst Samik Chatterjee wrote in a July 7 note. \u201cApple has taken meaningful pricing across the portfolio in the past, and volumes have continued to expand despite those price increases.\u201d<\/p>\n
Meanwhile, investors see a potential catalyst in the upcoming release of a foldable iPhone expected in September. The device is expected to carry a high price tag and could entice more customers to upgrade their phones. Earlier this month, Nikkei reported that Apple told its suppliers to prepare to produce about 10 million foldable iPhones this year, up from a previous forecast of seven to eight million.<\/p>\n
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\u201cWhile Apple is immune from AI weakness, the main reason to not sell it is that it probably has a huge hit coming,\u201d said Louis Navellier, chief investment officer at Navellier & Associates. \u201cPricing 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.\u201d<\/p>\n
Apple\u2019s revenue is expected to expand nearly 15% in fiscal 2026, which ends on September 30. That would represent its fastest annual growth since 2021 when the pandemic sent sales of electronic devices soaring. Net income is expected to rise 17%.<\/p>\n
While the company\u2019s profit and revenue growth is still tepid relative to its megacap peers, its conservative approach to spending means it\u2019s piling up more cash at a time when others are moving in the opposite direction.<\/p>\n
Apple\u2019s free cash flow is expected to be a record $140 billion this year, up more than 40% from 2025. By comparison, Alphabet\u2019s free cash flow is projected to fall about 67% this year to $21 billion.<\/p>\n
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Of course, investors are paying a hefty premium for that. Apple is priced at 33 times profits estimated over the next 12 months, making it the most expensive stock among the Magnificent Seven aside from Tesla and well above its average over the past decade at 23 times.<\/p>\n
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That\u2019s a key reason why just 61% of Wall Street analysts tracked by Bloomberg that follow the stock recommend buying it. By comparison, 90% of the analysts covering Microsoft, Amazon, Meta and Nvidia have buy ratings on those stocks, according to data compiled by Bloomberg.<\/p>\n
\u201cRight now I own Nvidia but not Apple, since Nvidia\u2019s growth and valuation both look more attractive,\u201d said Rye\u2019s Bronzo. \u201cHowever, so long as we\u2019re in an uncertain market, Apple\u2019s 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.\u201d<\/p>\n
Tech chart of the day<\/span><\/h3>\n![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/07\/460371860-555x258.jpg\")
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Investors are rotating beyond AI winners in emerging markets, where just three technology stocks worth $4.4 trillion drive an outsized share of returns.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n
#Apples #600bn #rally #fuelled #traders #fleeing #selloff<\/p>\n","protected":false},"excerpt":{"rendered":"
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