Wall Street hammered Apple for missing the initial GenAI wave and skimping on spending compared to rivals. Now, that’s being reevaluated. Investors are souring on the massive AI bets from OpenAI, Meta, and Microsoft — fueling wild swings in 2025’s hottest stocks. Suddenly, Apple’s whiff on GenAI has a silver lining.
Ryan Vlastelica and Carmen Reinicke:
While it’s still considered a potential AI winner, it doesn’t carry the risk of heavy capital expenditures and it does have ample cash on its books. That makes Apple shares a potential haven within the technology industry if the AI trade unwinds further.
“The hedge is it’s still a technology company, but not an AI company,” Brian Mulberry, client portfolio manager at Zacks Investment Management, said. “There is this positive feel for Apple that they don’t have to answer the big question that everybody else does, which is: What is the return on your invested capital in all of these other areas?”
The thesis is simple. Apple will benefit as it taps other companies’ models to deliver AI features to its millions of customers while avoiding much of the heavy spending required to develop its own capabilities, which is what many of its megacap peers are doing.
“Apple has the least exposure of the Mag 7 to AI in terms of where it is spending money and how leveraged it is,” said Brian Pollak, portfolio manager and head of the investment policy committee at Evercore. “It is absolutely true that it is a potential beneficiary of AI without having to spend all the capital that its cohorts are.”
“It has such a strong balance sheet, such strong cash flow, such a large moat in its business,” Pollak said. “All that makes it more defensive than the companies that have spent so much more on AI and are more leveraged to it.”
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