TLDR
- Apple (AAPL) rose 3.2% Tuesday, the biggest gain among Magnificent Seven stocks
- Investors are treating Apple as a “safe haven” from heavy AI spending by rivals like Meta, Microsoft, and Alphabet
- Apple’s 2025 capex was $12.7 billion — a fraction of Meta’s projected $115–$135 billion for 2026
- Apple announced an AI partnership with Alphabet, basing its next Foundation Models on Google’s Gemini
- Wedbush’s Dan Ives reaffirmed an outperform rating with a $350 price target, implying ~33% upside
Apple stock climbed 3.2% on Tuesday, leading all Magnificent Seven stocks on a day when most of its peers were in the red.
Microsoft fell 1.1%, Alphabet dropped 1.2%, Tesla slid 1.6%, and Meta dipped 0.1%. Amazon and Nvidia each gained 1.2%.
The move reflects a shift in how Wall Street is thinking about Big Tech. Investors who once cheered massive AI spending are now asking a harder question: where’s the return?
“One of the reasons people loved investing in megacap technology was these are earnings and cash flow generating machines,” said Steve Sosnick, chief strategist at Interactive Brokers. “Well, this AI spend is changing that dramatically.”
The numbers are hard to ignore. Microsoft, Alphabet, Amazon, and Meta are collectively expected to spend around $650 billion in capital expenditures this year alone. Meta has guided for $115–$135 billion in full-year capex in 2026.
Apple’s 2025 capex? $12.7 billion. Wall Street expects that to rise only slightly to $12.9 billion in 2026.
That gap is exactly why some investors are warming up to Apple right now.
“People look at it as a safe haven against this big AI spending, this ROI story, just because their capex is relatively low compared to other hyperscalers,” said Ryuta Makino, research analyst at Gabelli Funds.
The Roundhill Magnificent Seven ETF has fallen 11% from its record closing high on October 29, while Apple stock is up 7.9% over the past 12 months — outperforming Microsoft, Amazon, and Meta over that stretch.
Apple’s AI Pivot Through Partnerships
Apple hasn’t been immune to criticism over its AI progress. The company delayed key AI updates and its existing features have been seen as underwhelming compared to rivals. That narrative weighed on sentiment for much of last year.
But Apple is now leaning into partnerships rather than building everything in-house. In January, the company announced a deal with Alphabet to base its next generation of Apple Foundation Models on Google’s Gemini models and cloud infrastructure.
Sosnick put it plainly: “Apple remains an earnings juggernaut and a cash flow monster. And they’ve got hundreds of billions of dollars in cash and they’re not spending it on AI.”
Product Pipeline Adding Fuel
Bloomberg reported Monday that Apple is planning a product launch on March 4, with in-person showcases for select media. The event is expected to feature a refreshed Mac lineup.
Beyond that, Apple is reportedly developing three new AI-powered wearables: AI-enabled AirPods, smart glasses, and a Siri-powered pendant.
Apple also announced new video podcast features for its Podcasts app, letting users switch between audio and video, and allowing creators to run video ads. Apple plans to charge ad networks impression-based fees beginning later this year.
Wedbush analyst Dan Ives reaffirmed his outperform rating Tuesday and maintained a $350 price target — about 33% above current levels.
Risks Remain
Margins face pressure as memory chip costs rise with AI demand. CEO Tim Cook has not ruled out price increases on Apple products, though that could weigh on consumer demand.
Apple is up 7.9% over the past 12 months as of Tuesday’s close.
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