For quite some time, the narrative has been that Apple has fallen behind in the AI arms race, but that very quality is now making it appealing to investors looking for an AI-safe play.
Bloomberg first reported on Wednesday that Apple’s stock isn’t closely tracking other major tech and AI names. The iPhone maker’s 40-day correlation to the Nasdaq 100 Index, which tracks the largest companies listed on the exchange, has fallen to its lowest level since 2006. The figure measures how closely Apple’s stock moves alongside other tech stocks over a rolling 40-day period. A correlation of 1 means Apple and the Nasdaq 100 are moving in lockstep, while −1 means they are moving in opposite directions. According to Bloomberg, Apple’s correlation has dropped to 0.21, down from 0.92 in May.
And right now, that divergence is attractive to Wall Street.
“Apple’s lack of correlation is 100% a positive right now,” Art Hogan, chief market strategist at B. Riley Wealth, told Bloomberg. “We’re in an environment of AI whack-a-mole, where investors are so nervous about what will be disrupted next they’re shooting first and asking questions later.”
Looking over the past 30 days, Apple stock is up about 7%. Meanwhile, Microsoft and Alphabet, Google’s parent company, are down roughly 12% and 6%, respectively.
Apple has (accidentally?) positioned itself as something of an anti-AI bet. Unlike other tech companies, it hasn’t poured tens of billions into building massive data centers that may never pay off, especially if the AI bubble bursts. Additionally, the company’s core hardware business is also less likely to be directly disrupted by advances in generative AI. In fact, the Mac Mini has become the go-to purchase for people who want to run AI locally, so the company even has some skin in the game if AI persists as a huge part of growth in the tech industry.
By contrast, Alphabet, Microsoft, Meta, and Amazon are expected to spend roughly $700 billion this year on AI infrastructure and development, according to CNBC.
“There’s a lot less risk for hardware than software,” Wayne Kaufman, chief market analyst at Phoenix Financial Services, told Bloomberg. “And regardless of anything else, it isn’t like people can use AI to code themselves a new iPhone.”
Luckily for Apple, iPhone sales keep booming. Last month, Apple reported that in the three months ending in December, it generated $143.8 billion in revenue, up 16% year over year.
Still, Apple isn’t completely steering clear of Apple-branded AI hype. Bloomberg reported on Tuesday, citing unnamed sources, that Apple is working on three AI-powered wearables, including smart glasses, new AirPods, and a wearable pendant. Each of the products is expected to connect to the iPhone and include cameras to help power the AI features.
Apple did not immediately respond to a request for comment from Gizmodo.
