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By Emily Bary

Apple has been seen as an AI loser. That means its stock hasn’t gotten caught up in the heavy selling pressure on AI stocks.

Apple has been able to drive strong iPhone upgrades from people looking to replace much older devices.

What was once the biggest knock against Apple’s stock is now proving to be a positive as tech shares come under pressure.

Not only has Apple’s stock (AAPL) beaten the tech-heavy Nasdaq Composite Index COMP since the start of November, but it’s outperformed the more broad-based S&P 500 SPX as well. That partly owes to the fact that AI plays have been hard hit in recent sessions, but Apple isn’t seen as an AI stock.

“Apple shares have shown resilience compared to their mega-cap peers as they have significantly less exposure to the AI cycle,” D.A. Davidson analyst Gil Luria told MarketWatch in emailed comments.

Microsoft’s stock (MSFT) is getting close to joining Nvidia (NVDA), Amazon.com (AMZN) and Tesla (TSLA) shares in correction territory, which is defined as a 10% drop or more off a recent closing high. And Meta’s stock (META) is already in a bear market, meaning it’s off more than 20% from its recent closing high. But Apple and Alphabet (GOOG) (GOOGL) shares stand out, down less than 3% from their recent highs.

See more: Two more ‘Magnificent Seven’ stocks are now in correction territory as the AI trade unwinds

While people use their iPhones to access AI tools, “the current iPhone upgrade cycle is showing that [Apple] does not need AI in order to drive demand,” Luria continued. “An aging iPhone base is translating to the best upgrade cycle in years, which is helping deliver the current resilience.”

Apple has vastly underspent its Big Tech peers on its artificial-intelligence buildout, opting for more of a hybrid approach to data centers. FactSet data indicates Amazon spent approximately 10 times as much on capital expenditures in the September quarter than Apple did.

The iPhone maker’s more measured approach to AI spending has largely been perceived as a negative by Wall Street up until this point. Apple has been branded an AI laggard, and indeed the company has struggled to roll out the AI features it has teased. But now the market is getting more jittery about fellow tech giants’ rampant data-center spending, which has in some cases prompted debt financing despite uncertainties around the returns on these investments.

More from MarketWatch: Amazon and Microsoft shares could be in trouble due to AI’s destructive economics

Apple shares now rank in the middle of the pack among “Magnificent Seven” players this year. Up about 7%, they dramatically lag Alphabet shares, which are the group’s leader. But they’ve now beaten out shares of Meta, for instance, which have been dogged recently by concerns about AI overspending.

Jeffrey Favuzza, a tech, media and telecommunications strategist at Jefferies, said Apple’s recent outperformance has more to do with the fact that investors have underweighed the stock relative to others in the group.

There are still numerous questions facing Apple investors, he said, including whether a foldable phone will materialize and be a big driver of upgrades. Investors are also left to wonder who will succeed CEO Tim Cook, after the Financial Times recently reported that he may step down as soon as next year.

Plus, there’s been somewhat of a “brain drain” from Apple’s AI ecosystem, Favuzza added. And while Apple isn’t spending nearly as much as rivals on AI, its operating expenses moved higher in the latest quarter, casting some doubt around future earnings trends.

Don’t miss: Nvidia earnings have become crucial to the stock market – and this time even more so

-Emily Bary

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  11-18-25 1754ET
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