When peers are caught in the “AI money-burning race,” Apple has become a safe haven in the technology sector.

When peers are caught in the “AI money-burning race,” Apple has become a safe haven in the technology sector.

When Wall Street began questioning the astronomical investments made by tech giants in artificial intelligence, Apple, previously criticized for its lack of AI investment, suddenly became a safe haven for investors. With its low capital expenditure and ample cash, the iPhone maker demonstrated unique defensive value amid severe volatility in the tech sector.

On November 11, reports surfaced that investors were scrutinizing the massive AI spending by companies such as OpenAI, Meta, and Microsoft, leading to sharp fluctuations in some of the year's most prominent tech stocks. At the same time, Apple's strategic positioning is being reassessed—it can provide AI features to millions of users by accessing other companies' models, without needing to bear the huge investment required for developing proprietary capabilities.

Last week, while tech stocks suffered due to concerns about AI expenditures, Apple showed marked resilience. While other tech stocks saw steep declines, Apple's stock was nearly unchanged over five trading sessions. In fact, since the second half of this year, Apple's shares have risen 31%, far exceeding the S&P 500, the Nasdaq 100, and most major tech rivals.

This divergence was particularly evident in the latest earnings season. Despite mixed results and an unexpected drop in China revenue, Apple's stock rose nearly 3% the day after its earnings report. By contrast, members of the "Magnificent Seven" like Meta and Microsoft faced selloffs due to huge capital expenditures and disappointing outlooks; Meta's share price plunged more than 11% on October 30, marking the biggest single-day drop in three years.

Huge Gap in Capital Expenditures

Capital expenditure data clearly outlines the differences between Apple and its peers.

It is forecasted that Apple's capital expenditure for the fiscal year ending in September 2026 will be around $14 billion. In contrast, Microsoft's capex for the fiscal year ending June is expected to exceed $94 billion, while Meta, which is only half Apple's size, is projected to spend more than $70 billion in 2025.

"The hedging logic is that it is still a technology company, but not an AI company," said Brian Mulberry, client portfolio manager at Zacks Investment Management. "There is a positive sentiment toward Apple in the market; people feel it doesn't have to answer the key question other companies face: what is the return on invested capital in all these areas?"

Brian Pollak, Evercore portfolio manager and head of the investment policy committee, noted:

"Among the 'Magnificent Seven,' Apple has the lowest exposure and leverage to AI spending. It can indeed be a potential beneficiary of AI, without having to invest all its capital like its peers."

Performance Differentiation Highlights Defensive Nature

This strategic difference is directly reflected in stock performance.

In the AI-driven 2025 market, Apple is the worst-performing member of Bloomberg's "Magnificent Seven," rising only 7.6%; by comparison, Alphabet (Google's parent) soared 53%, and Nvidia rose 48%. Even the S&P 500 and the Nasdaq 100 comfortably outperformed Apple this year.

However, this very "lagging" became an advantage. Pollak stated:

"Its balance sheet is so strong, its cash flow is so robust, and its business moat is so wide. All of this makes it more defensive than companies that invest more or rely more heavily on AI."

Investor Division, Questioning Hedging Value

Despite Apple’s recognized defensive attributes, investors remain divided on its role in an AI-dominated market. Supporters believe Apple’s strong balance sheet, steady cash flow, and business moat make it more defensive than those making heavy AI investments.

However, there are also voices questioning Apple’s value as a hedge. Vikram Rai, a portfolio manager at First New York, bluntly said:

"I don't think Apple is a hedging tool, it’s just a laggard stock. I don't think it gives you the alpha returns you want for your portfolio."

Bank of America analyst Vivek Arya wrote in a November 10 research note that while general skepticism toward AI capex is understandable, it may be exaggerated: "Widespread skepticism could actually be a contrarian positive, helping to reduce overcrowding."

As investors begin to worry about the level of AI investment and look for returns, Apple’s relatively restrained strategy may demonstrate more value amid market volatility.

Risk Warning and DisclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice and does not take into account any individual user's particular investment objectives, financial situation, or needs. Users should consider whether any opinions, views or conclusions in this article fit their particular circumstances. Investing accordingly is at your own risk.