Apple Inc. is trading in the opposite direction of technology stocks and the broader market as investors increasingly view it as an oasis of safety amid fears of artificial intelligence disruption.
The iPhone maker's shares were up 1.8% at around 12:30 p.m. in New York on Wednesday, compared with a 2.4% decline in the tech-heavy Nasdaq 100 Index. That means Apple is outperforming by its widest degree since early 2025. The move extends a recent trend, with Apple up nearly 6% to start this month, while the index is down 3.3%.
The gain has resulted in a market capitalisation of just over $4 trillion for Apple, allowing it to squeak past Alphabet Inc. for the title for the second-largest company in the world, after Nvidia Corp.
The divergence reflects both positive trends at Apple and growing uncertainty in much of the tech sector.
Photo Credit: (Photo: Bloomberg)
“It doesn't seem like the AI disruption theme is extending to hardware, which is certainly a positive at a time when the market has made the decision that AI is going to eat the entire software space,” said Dan Eye, chief investment officer at Fort Pitt Capital Group, which holds Apple shares in multiple portfolios.
The divergence reflects both positive trends at Apple and growing uncertainty in much of the tech sector. Results from Apple last week featured record quarterly sales and a better-than-anticipated forecast. At the same time, new AI tools from Alphabet Inc. and the startup Anthropic have spurred widespread selling of tech stocks, as investors fret that AI services will eat into growth.
"Apple isn't a value name, but it isn't high-risk either," Eye said.
The company is expected to be a beneficiary of AI adoption, as hardware like the iPhone is expected to be a central place where users access AI services. Last month, Alphabet's Google entered a multiyear deal to power Apple's AI technology, including the Siri voice assistant.
Meanwhile, Software stocks have come under broad pressure, with a popular exchange-traded fund tracking the group down 2.7% and on track for a seventh straight negative session, its longest losing streak in more than two years. Even Microsoft Corp. has lost 14% this year, as the company's earnings featured a disappointing read on its cloud-computing business along with increased scrutiny on the amounts it is spending on AI.
"Apple's decision to stay out of the AI arms race seems like a smarter play today than it did six months ago," Eye said. "It should still benefit from AI, but it isn't forced to run up a hundred billion in debt and capex to fund a lot of infrastructure and projects."
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