Apple emerges as Wall Street’s favourite AI haven as spending fears hit

Published Fri, Oct 23, 2026 · 07:00 AM

IT HAS become one of the most reliable trades in the stock market as sentiment towards artificial intelligence swings wildly: Whatever AI stocks do, Apple does the opposite.

The iPhone maker’s stock is up 28 per cent in 2026, making it the biggest contributor to the S&P 500’s 12 per cent climb.

It is also by far the best performer among the Magnificent Seven technology giants this year, a stark reversal from 2025, when its 8 per cent gain put it near the bottom of the group. 

The reason for the divergence is fairly simple. While most mega-cap tech companies are spending wildly on AI infrastructure, Apple is largely sitting it out and instead focusing on what it historically does best, creating products that get consumers buzzing, such as its new foldable iPhone Duo.

With Wall Street’s view towards AI capital expenditures seemingly in constant flux, the company’s shares have become investors’ preferred method for staying in Big Tech while avoiding some of the group’s ups and downs.

“Apple is a very liquid hedge against AI volatility, and it’s a great position to have if you’re starting to get worried about AI but still want tech exposure,” said Jordan McCall, senior portfolio manager at Russell Investments, which has US$418 billion in assets and owns the company’s shares in multiple portfolios.

“Apple is a flight to safety when the market gets nervous.”

The divergence was clear on Thursday (Oct 22), when Apple rose 0.5 per cent and was the only Magnificent Seven stock in the green, while the broader market fell with chip stocks leading the way down, after results from Lam Research and Meta Platforms raised questions about AI spending.

Investors are searching for safety because sentiment around AI is shifting so quickly.

Shares of the big spenders like Microsoft, Amazon, Alphabet and Meta, as well as those of the chipmakers at the heart of AI infrastructure, rise and fall as Wall Street debates when and if the hundreds of billions in capital expenditures will pay off in a big way.

Apple has an increasingly negative correlation to semiconductor stocks and often moves in the opposite direction of its mega-cap peers.

The dynamic was apparent last week, when concerns about cloud computing provider CoreWeave’s debt spurred widespread selling of AI stocks. The PHLX Semiconductor Sector Index (SOX) tumbled more than 11 per cent, marking its worst week since April 2025, while an index of Magnificent Seven stocks sank 3.1 per cent.

Apple, meanwhile, rose 2 per cent as the company said demand for the iPhone Duo was “nothing short of extraordinary”.

“If hyperscalers get more bad news, it would make sense to sell the SOX and use the money as a source of funds to buy Apple,” said Michael Matousek, head trader at US Global Investors.

“Apple is more of a defensive play because it lacks exposure to the themes moving chips, and given how pronounced this kind of pair trade has become, it is so much easier to just go with the momentum. I wouldn’t fight it.”

Apple’s 40-day correlation to the chip index has been negative since early July and is at its most extreme in data going back to 1994. On a 10-day basis, Apple has a negative 90 per cent correlation with the chip index, said Jonathan Krinsky, chief market technician at BTIG. 

McCall added that Apple’s strong free cash flow and durable earnings growth are helping it stand out.

Microsoft, Amazon, Alphabet and Meta have seen their free cash flow plummet or even turn negative as they invest in AI infrastructure. And while chipmakers are seeing huge growth for the time being, the fear is their earnings will nosedive if that spending slows. 

The primary concerns for Apple shareholders are that it is growing more slowly than its Big Tech peers but carries a soaring stock market valuation.

The company is scheduled to report earnings for its fourth quarter in a few weeks, and revenue is expected to rise about 15 per cent for the year, well below the overall tech sector, according to Bloomberg Intelligence data.

The pace is further expected to slow to 9.7 per cent in FY2027 and 5.5 per cent in FY2028.

Meanwhile, Apple shares trade at 36 times earnings estimated over the past 12 months, their highest multiple since January 2008. That is twice Nvidia’s valuation and well above where the tech-heavy Nasdaq 100 and S&P 500 trade.

This combination could make it difficult for Apple to continue outperforming, especially if investors’ perceptions of big AI spenders and chipmakers improves again.

“With SOX having just seen a minus 16 per cent pullback, and Apple at all-time highs, we think a bounce in SOX is likely to coincide with Apple pulling back, at a minimum, toward its (50-day moving average),” BTIG’s Krinsky wrote on Monday. Apple’s 50-day moving average is 4.7 per cent below the stock’s most recent closing price.

There is certainly a precedent for this kind of reversal. As recently as August, strengthening sentiment towards AI plays lifted shares of Microsoft, Amazon and Alphabet, while Apple struggled.

“I would be shocked if we didn’t see another period of AI enthusiasm that leads to chipmakers coming back, and it is very reasonable and plausible to think the pattern would repeat itself again,” McCall said. “Risk on for AI would mean risk off for Apple.” BLOOMBERG