TLDR
- Apple (AAPL) jumped 3.2% Tuesday, outperforming every other Magnificent Seven stock
- Low AI capital spending is making Apple look attractive as rivals commit hundreds of billions
- Apple’s $12.7 billion 2025 capex is a fraction of Meta’s projected $115–$135 billion for 2026
- A Google Gemini partnership gives Apple an AI path without the heavy price tag
- Wedbush analyst Dan Ives has a $350 price target, around 33% above current levels
Apple stock posted a 3.2% gain Tuesday, the strongest performance in the Magnificent Seven as investor sentiment continues to shift away from heavy AI spenders.
Microsoft dropped 1.1%, Alphabet fell 1.2%, Tesla lost 1.6%, and Meta slipped 0.1%. Amazon and Nvidia both added 1.2%.
The rotation is becoming hard to ignore. Big Tech’s AI spending has ballooned, and Wall Street is growing impatient waiting for returns.
“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. It’s sopping up a lot of that free cash flow.”
Microsoft, Alphabet, Amazon, and Meta are on track to spend a combined $650 billion in capex this year. Meta alone has guided for $115–$135 billion in 2026.
Apple spent just $12.7 billion on capex in 2025. Wall Street sees that rising only slightly to $12.9 billion in 2026 — a rounding error by comparison.
“People look at it as a safe haven against this big AI spending 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 slid 11% from its record close on October 29. Apple is up 7.9% over the same 12-month period, beating Microsoft, Amazon, and Meta.
Partnering Its Way Into AI
Apple hasn’t escaped criticism for lagging on AI. Feature rollouts have been delayed, and early efforts have underwhelmed.
Rather than open the spending taps, Apple is using partnerships to move forward. In January, the company confirmed a deal with Alphabet to build its next generation of Foundation Models on Google’s Gemini platform and cloud infrastructure.
It’s a practical approach — Apple gets access to state-of-the-art AI without the capital commitment that’s weighing on rivals.
Sosnick put it simply: “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.”
March Launch and New Products Ahead
Bloomberg reported Apple is planning a media event on March 4, expected to include a refreshed Mac lineup. The company is also developing three AI-powered wearables: AI-enabled AirPods, smart glasses, and a Siri-powered pendant.
New video features are coming to the Podcasts app, including video ads with impression-based fees for ad networks launching later this year.
Wedbush’s Dan Ives reaffirmed his outperform rating and $350 price target on Tuesday.
One risk on the table: rising memory chip costs tied to AI demand are squeezing margins, and Tim Cook has not ruled out price hikes on Apple devices.
Apple ended Tuesday up 3.2%, with a 7.9% gain over the trailing 12 months.
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