Apple has been scolded for lagging behind in the AI race. Why has it now become an advantage?

Apple has long been criticized by Wall Street for not investing in artificial intelligence as aggressively as its Big Tech rivals. But now this strategy is unexpectedly turning into an advantage for the iPhone maker, Bloomberg writes.

Investors are increasingly questioning whether giant investments by companies such as OpenAI, Meta Platforms and Microsoft in AI development are justified, Bloomberg writes. This leads to high volatility in their shares, although previously investments in AI were considered growth drivers for technology companies. Against this background, analysts are reconsidering the attitude to Apple: the company is still seen as a potential beneficiary of AI implementation, but it does not bear the risks associated with excessive capital expenditures, and also has a significant cash reserve, the agency explains. This makes Apple securities a potential "safe haven" within the technology sector if the AI rally starts to choke, Bloomberg believes.

Apple's capital spending in its current fiscal year, which ends in September 2026, will be about $14 billion. By comparison, Microsoft plans to spend more than $94 billion in its fiscal year ending in June, and Meta plans to spend more than $70 billion in 2025, despite being half the size of Apple.

According to the agency, investors' fears manifested themselves in the movement of stocks on November 11: Apple's securities rose by 1% at the opening of trading and became the leader of growth in the S&P 500 index, while the main beneficiaries of AI - Nvidia, Meta and Microsoft - fell in price by 3.5%, 1.1% and 0.2 respectively.

"Apple is still seen as a technology company, but not an artificial intelligence company - that's the hedge," Brian Mulberry, an investment portfolio manager at Zacks Investment Management, told Bloomberg. - Apple has a positive image right now - it doesn't have to answer the big question everyone else is asking: what return are you getting on your investment in these new directions?"

"Of all the Magnificent Seven companies, Apple has the least involvement in AI in terms of spending and leverage," Brian Pollack, portfolio manager and head of the investment committee at Evercore Wealth Management, explained to the agency. - This is true: it is potentially benefiting from the trend without spending all of its capital like its peers."

The analyst notes that the company has a strong balance sheet, strong cash flow and serious barriers to competitors. "All of these factors make it a more defensible asset against companies that have invested far more in AI and now depend on it," Pollack notes.

"My view is that Apple is not a hedge, it's just a lagging stock," said First New York portfolio manager and macro trader Vikram Rai. - "I don't think it's going to provide the momentum you're waiting for to get alpha in the portfolio.

"The widespread doubt about AI capex is understandable, but perhaps a positive from a countertrend perspective: it helps avoid overheated and crowded positions," Bank of America analyst Vivek Arya wrote in a Nov. 10 note to investors. The recent weakness in tech stocks, he added, has more to do with external factors like the shutdown, while "demand overall remains resilient."

This article was AI-translated and verified by a human editor