“Apple’s lack of correlation is 100% positive right now,” said Art Hogan, who helps oversee $25 billion as chief market strategist at B. Riley Wealth. “We are in an AI-crazed environment, where investors are so nervous about what will be disrupted next that they shoot first and ask questions later.”
For more than a month, investors have been in an AI-fueled “doom loop,” moving back and forth between fears that the hundreds of billions of dollars spent on AI won’t pay off and worries that industries from software to asset management and logistics will be rendered obsolete by the same technology.
Apple, meanwhile, is not meeting either side of that fear. The iPhone maker doesn’t participate in the huge capital expenditures and doesn’t have a major industry that is threatened by the likes of Anthropic PBC’s Claude tools. While Apple has faced challenges in integrating AI into its products, the company is said to be accelerating the development of three AI-powered hardware devices.
The results published last month also highlighted some of the positive trends at the company. It reported record quarterly revenue — with notable strength in its core iPhone product line — and gave a better-than-expected outlook for the current quarter. The company is hosting a product launch event in a few weeks.
Apple’s disconnect from its technology peers was on full display Tuesday, when its 3.2% gain easily outperformed the 0.1% decline in the Nasdaq 100 Index. That marked the third time this month the stock beat the gauge by at least 3 percentage points, including a Feb. 4 thrashing that was the best in more than a year. The stock is up 1.7% for the month of February, compared with a 3.3% decline in the Nasdaq 100 and a 7.5% slump for the Magnificent Seven Index, which is on track for its worst monthly performance since March.“It might have less room to rise during a technology upturn, but I don’t think it’s going to sell because it’s at the top of the list of companies that seem isolated from AI,” Hogan said.
Still, the stock has experienced its share of volatility, including last week’s 8% drop, the biggest since April. Thursday’s 5% drop was the worst since April’s tariff-induced sell-off and came just a day after Bloomberg News reported that the company’s long-planned upgrade to its Siri virtual assistant could be delayed.
Skyrocketing memory chip prices have also become a growing headwind, especially as Apple’s growth lags behind other names in the technology sector. Analysts expect sales to rise 11% for the fiscal year ending in September before slowing to a pace of 6.7% in fiscal 2027. Earnings are also expected to slow next year, according to Bloomberg estimates.
These relatively tepid earnings growth prospects have the stock trading at about 30 times estimated earnings over the next year, higher than any Magnificent Seven peer outside Tesla Inc. and well above the 24 level at which the Nasdaq 100 trades.
“Apple is not a bargain, and hasn’t been for a while, and there’s no real growth compared to the rest of the tech sector,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services. “However, I think the market will continue to give the benefit of the doubt.”
“There are far fewer risks for hardware than for software,” Kaufman added. “And anyway, it’s not like people can use AI to code themselves a new iPhone.”
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