Apple hits all-time high as Wall Street values it like a consumer stock

Apple shares rose almost 1% on Friday, setting another intraday record this week. The surprise departure of Nvidia’s CEO has heightened already acute investor anxiety over tech stocks, and the iPhone maker has benefited as investors shifted money out of stocks tied to the AI boom. Apple’s market value is up 4.6% over five trading sessions at more than $5.2 trillion, making it the world’s largest company.

Apple is drawing investors looking for a haven from faster-rising, riskier AI stocks, Bernstein says. “With little correlation to tech peers, Apple now trades in line with high quality consumer stocks,” Bernstein analysts led by Mark Newman wrote, as quoted by CNBC. Bernstein has reiterated its “outperform” rating on Apple at a target price of $380 per share, implying around 7% upside from Thursday’s close.

Apple shares continued to rally even after John Ternus succeeded Tim Cook as CEO and the company faced higher memory costs and narrower margins. Unlike other members of the Magnificent Seven, the iPhone maker has gained a reputation as a defensive stock because it has little correlation with tech peers that are spending hundreds of billions of dollars on capex. Apple has stayed out of the costly AI arms race, with capex accounting for less than 2% of revenue.

The stock has thus benefited from the AI selloff, and its price/earnings ratio has reached an all-time high.

“The market has long decoupled Apple from the rest of the mega-cap tech names and reclassified Apple to a consumer compounder,” Newman said. Apple now trades in line with consumer stocks after adjusting for revenue growth and at a slight premium after adjusting for growth in earnings and free cash flow.

Apple trades at 37 times projected 2027 earnings per share, roughly double the broader market’s forward earnings multiple. According to Bernstein, among companies with a market capitalization above $200 billion and expected earnings-per-share growth below 15%, only four trade at a forward P/E above 30. Costco trades at 46 times, Walmart at 39, Apple at 37, and General Electric at 36.

Meanwhile, Apple’s revenue is expected to grow around 9% annually through 2029, ahead of the projected 7% for Costco and 5% for Walmart. Apple also leads in its ability to generate free cash flow and return cash to shareholders. Analysts estimate a free cash flow yield of 3.1% and expect buybacks to equal 3% of market capitalization in 2027 and 3.2% in 2028. Apple is expected to return almost all of its free cash flow to shareholders through buybacks and dividends.

Newman said Apple has many of the hallmarks of a consumer staples company, including predictable demand for replacement devices, pricing power with suppliers and customers, relatively low investment needs, and steady cash returns to shareholders. Together, those traits make its earnings more predictable, he said.

A Bernstein survey found that 90% of iPhone users stuck with the brand when replacing their previous device. The analysts pointed out that Costco’s annual membership renewal rate worldwide is also around 90%, and that the retailer trades at roughly 40 times annual earnings.

“On forward revenue growth metric, Apple is now the fastest growing company if put in the consumer universe and trades in-line with the rest of its peers on a revenue growth adjusted basis; on earnings and FCF growth it sits modestly above the line, alongside Ferrari and the scale retailers,” Newman said.