Why Apple's Playing It Cool on AI Is Suddenly Wall Street's Favorite Move

Why Apple's Playing It Cool on AI Is Suddenly Wall Street's Favorite Move

In a market that's grown tired of the AI hype machine, Apple's deliberate sidestep from the frenzy is turning heads—and boosting its stock like never before. Once slammed for dragging its feet on artificial intelligence, the iPhone giant is now hailed as the smart, steady bet amid the chaos. Let's dive into why investors are flocking back to Apple, and what it means for your portfolio.

From AI Laggard to Market Darling

Picture this: Earlier in 2025, Apple's shares nosedived 18% by June's end, earning it the unwanted title of the second-worst performer among the "Magnificent Seven" tech titans. Critics couldn't stop harping on its missing AI playbook. Fast-forward to today, and the script has flipped dramatically.

Since late June, Apple's stock has rocketed 35% higher—outpacing the S&P 500's modest 10% gain and the Nasdaq 100's 13% climb. Meanwhile, AI poster children like Meta and Microsoft are bleeding red, and even Nvidia is lagging. Why the turnaround? Simple: Wall Street's AI fatigue.

"It's remarkable how they've kept their heads and stayed in control of spending, while all their peers have gone the other way," marvels John Barr, portfolio manager at the Needham Aggressive Growth Fund, which holds Apple shares.

The "Anti-AI" Edge That's Paying Off Big

Apple's secret sauce? Refraining from the "AI arms race" and its eye-watering capital expenditures. While rivals pour hundreds of billions into unproven AI dreams, Apple is playing the long game—positioning itself to cash in when the tech matures and floods into everyday devices.

Bill Stone, chief investment officer at Glenview Trust Company and an Apple shareholder, nails it: "They've avoided the massive capex that comes with it, making Apple a bit of an anti-AI holding."

The payoff is already massive. Apple's market cap now towers at $4.1 trillion, snagging the No. 2 spot in the S&P 500—leaping past Microsoft and nipping at Nvidia's heels. As AI doubts swirl, investors see Apple as a fortress: a company with an unbreakable consumer moat, ready to supercharge iPhone sales and its lucrative services empire once AI hits the masses.

But Is the Party Over? Valuation Warnings Ahead

Don't get too cozy just yet. This rally has inflated Apple's price tag to about 33 times next year's expected earnings—a premium unseen in years, with the stock now the second-priciest in the Magnificent Seven (only Tesla's wild 203 multiple tops it). The long-term average? A bargain-basement 19 times.

Craig Moffett, co-founder of MoffettNathanson, sounds the alarm: "It's hard to see how the stock keeps compounding value at a level that makes this a compelling entry point right now. Are investors overpaying for Apple's defensiveness? We think so."

Even Warren Buffett's Berkshire Hathaway trimmed its Apple stake by 15% last quarter, pivoting toward AI darling Alphabet. Yet, Apple still dominates Berkshire's portfolio by value. And technically? BTIG's Jonathan Krinsky warns of a possible January dip as the stock stretches beyond its 200-day moving average—but he insists the "long-term trend for AAPL remains unquestionably bullish."

The Bigger Picture: AI Bubble or Bust?

At its core, Apple's surge spotlights a brewing Wall Street rethink. With real fears of an AI bubble bursting, the iPhone maker's restraint shines as prudence, not procrastination. "The stock is expensive, but Apple's consumer franchise is unassailable," Moffett adds. "In a time of bubble concerns, it's the safe place to hide."

As AI evolves from hype to reality, expect Apple to weave it seamlessly into its ecosystem—driving upgrades and loyalty without the debt hangover. For now, though, this "anti-AI" vibe is Apple's golden ticket.

Whether you're a die-hard shareholder or eyeing your next tech play, Apple's story reminds us: Sometimes, the boldest move is knowing when to pause.

Written by Allan Ali

Source Credit: This article is a rewritten adaptation based on the original reporting by Ryan Vlastelica and Felice Maranz, published on Bloomberg.com on December 9, 2025.

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