At a time when some of the most prominent capital allocators are reducing exposure to—or even betting against—AI, it’s natural for market participants to take some risk off the table. Apple (AAPL) is one stock that offers resiliency against potential AI-driven market dislocations. Despite supposedly being behind the 8-ball in AI, the IT giant has kept up with the S&P 500 (SPX) almost tick-for-tick this year.
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Despite a valuation that, by most standards, suggests caution, Apple occupies a rare market position thanks to brand advantages that competitors simply cannot replicate. I’m bullish—ironically, for defensive reasons. And I’ll explain why…
Apple Can Survive What Semiconductor Players Can’t
The dominant AI investments, including Nvidia (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO), are likely to experience revenue volatility if Big Tech data center capital expenditures prove cyclical. In contrast, Apple offers a long-term cash flow fortress built on stable, recurring growth from upgrades, new product introductions, and insatiable global demand for consumer high-tech.
At the moment, the AI investment thesis is looking a bit shaky. There’s no bubble—anyone deep in tech can tell you that; however, there is a potential temporary volatility cycle rearing its head due to bottleneck dynamics.
Interestingly, research firm Gartner (IT) projects that 40% of existing AI data centers will be operationally constrained by power availability by 2027, as AI and gen-AI drive electricity consumption far beyond what utilities had planned for—this is very likely to place a hard ceiling on growth in some regions, and explains why a period of cyclicality could emerge.
Even though the data points to volatility, air pockets, and bottleneck-driven turbulence, not a lasting collapse, some investors will want to take the edge off with a reliable stock known for its stable, long-term compounding qualities. Thankfully, Apple provides this, with a relatively strong annual return—the five-year total price return is a strong 125% at the time of this writing.
Apple’s Pricey Tag Isn’t Scaring Off Investors
Apple’s forward PEG ratio of 3.14 is 50% above the sector median (~1.65), suggesting investors are not getting a cheap value investment. That said, Apple commands its own lane as one of the largest companies in the world, dominating through intangible brand factors that keep its price elevated in the long term.
Even though the company’s detractors may claim the stock should return less than it does, the technicals show how the market is really responding to the company. The 50-day moving average has recently crossed above the 200-day moving average, indicating a bullish trend is well underway.
Furthermore, the 14-week RSI, which shows a longer-term horizon, is about 63. This is not technically overbought, but it shows strong, positive sentiment that could drive the price excessively high in the near term. That’s why I think it might be wise to wait for a pullback or for a period of consolidation before initiating a position.
Still, by simply following the long-term 50-week moving average, it’s possible to arrive at a 12-month price prediction of about $290–$300 per share, depending on market sentiment at the time and operational performance. The current price is about $265, so my independent analysis shows about a 10% increase over the period—that’s good, but not excellent.
All things considered, it’s better than buying AI names at a cyclical top before a significant temporary decline, and although that’s not guaranteed in semiconductor stocks right now, the risk is enough to choose prudence over greed.
Is Apple a Buy, Sell, or Hold?
On Wall Street, Apple is a Moderate Buy according to top analysts tracked by TipRanks, with 21 Buys, 12 Holds, and 2 Sells. The average AAPL price target of $289.17 indicates a 6% upside potential over the next 12 months.
This gives me confidence in my own price target, arrived at independently through technical analysis, as it essentially matches. Apple may not be the greatest investment of all time if one initiates a position in the company today, but it offers stability amid the cycle of tech’s high-growth uncertainty—that’s worth more than the pure return it provides.
How Do the Hedge Funds See Apple Stock?
Despite its headline-grabbing exploits, the smart institutional money doesn’t seem to like Apple stock.
According to TipRanks’ hedge fund tracker, AAPL is currently viewed with low confidence by Wall Street hedge fund managers.
According to 13F filings from 487 hedge funds submitted to the U.S. SEC over the past quarter, as AAPL has traded up to higher highs, hedge fund managers have reduced their stakes from around 1 billion shares in September 2023 to ~300 million today. The current Confidence Signal based on 119 leading hedge funds is Very Negative.
Apple Keeps Rising Even as AI Stumbles
Understandably, the top AI names are experiencing a moment of digestion; after all, the bear case has gained credibility recently. Energy costs are rising as grids reach their limits, and risk-off capital is seeking other destinations. Apple hasn’t dropped in price despite AI market fears, and I see no reason this trend of resilience won’t continue.
The stock’s valuation may be high relative to the sector median, but that’s often the cost of brand power and a dominant position on the world stage. I’m staying bullish on Apple, even if it’s not the best investment on the market from a pure return perspective.