Apple Inc. is emerging as an unlikely winner from Wall Street’s growing scepticism over artificial intelligence spending, with investors increasingly rotating into the iPhone maker as chipmakers and cloud-computing companies face mounting pressure.
The stock has rebounded sharply after disappointing investors with its latest AI announcements, adding nearly $600 billion in market value since bottoming on June 25 and returning to record highs, Bloomberg reported.
Apple’s AAPL shares have climbed 15% over the period, while the Philadelphia Semiconductor Index has declined 7% even as it still stays up by about 75% this year.
The broader S&P 500 has gained 3%, while the technology-heavy Nasdaq 100 has risen just 1.3%.
The rally has also made Apple the best-performing member of the so-called Magnificent Seven this year.
The stock has gained about 18% in 2026, outperforming Nvidia, Microsoft, Alphabet, Amazon, Meta Platforms and Tesla.
Alphabet and Amazon are both trading more than 10% below their May peaks, while Microsoft’s 18% decline has put the software giant on track for its weakest annual performance since 2022.
Investors rethink the AI trade
Apple’s resurgence comes as investors question whether the massive sums being spent on AI infrastructure will ultimately generate sufficient returns.
Unlike rivals such as Microsoft, Alphabet, Amazon and Meta, Apple has largely avoided the costly race to build AI data centres, a strategy that was initially viewed as leaving the company behind in artificial intelligence.
That perception is now changing.
“There’s a battle in the market, and right now Apple is benefiting because it isn’t in the storm that the rest of the AI trade is in,” Mark Bronzo, chief investment strategist at Rye Strategic Partners, told Bloomberg.
“People are concerned about what kind of return hyperscalers could get from their AI spending, and there are also arguments that semis have gotten ahead of themselves. As a result, investors have gravitated back to Apple as a steady-eddy name without those risks.”
The shift in sentiment has helped Apple recover despite continued criticism of its AI offerings, including the lukewarm reception to its latest Apple Intelligence features.
Pricing power offsets rising costs
The company’s recovery is particularly notable because it comes amid rapidly rising memory chip prices, which threaten margins across the consumer electronics industry.
Apple responded by raising prices on Macs, iPads and home devices on June 25, triggering its biggest single-day decline since April 2025.
While iPhone prices have so far remained unchanged, the company has indicated that further price increases remain possible.
Apple is also reportedly negotiating with two Chinese semiconductor manufacturers to diversify memory chip supplies and lower procurement costs.
Analysts believe Apple’s premium customer base gives it greater flexibility than many rivals to pass on higher component costs.
JPMorgan analyst Samik Chatterjee said pricing increases have historically had little impact on long-term demand, raising PT to $345.
“Long-term trends suggest that pricing has limited implications on volume opportunity over a multi-year period,” Chatterjee wrote in a July 7 note.
“Apple has taken meaningful pricing across the portfolio in the past, and volumes have continued to expand despite those price increases.”
Citi remains bullish ahead of earnings
Wall Street has also become increasingly optimistic ahead of Apple’s fiscal third-quarter results later this month.
Citi on Monday reiterated its Buy rating on the stock while raising its price target to $365. This implies an almost 14% upside to its current trading level.
The brokerage expects Apple to continue gaining market share even as broader smartphone and personal computer demand weakens.
Analysts said Apple “continues to outperform the broader smartphone market through share gains, design-driven demand, and strong positioning in the mid-range price segment via promotions and subsidies.”
Citi also expects Apple to raise iPhone prices during the September launch cycle, particularly on premium models where consumer demand remains relatively resilient.
The firm believes Apple’s enhanced Siri capabilities under Apple Intelligence are unlikely to trigger a major device replacement cycle immediately, but could improve user engagement and support long-term growth in its high-margin services business.
Foldable iPhone seen as next growth driver
Another reason for Apple’s renewed momentum is growing optimism surrounding its long-rumoured foldable iPhone.
Citi said the September iPhone launch was “an important catalyst that could further strengthen investor sentiment.”
According to Nikkei, Apple has instructed suppliers to prepare production of around 10 million foldable iPhones this year, up from an earlier estimate of seven to eight million units.
The premium pricing expected for the new device has strengthened confidence that Apple can offset higher component costs while boosting revenue growth.
“While Apple is immune from AI weakness, the main reason to not sell it is that it probably has a huge hit coming,” Louis Navellier, chief investment officer at Navellier & Associates, told Bloomberg.
“Pricing for the folding phone will be so strong that it will offset the memory issue on margins, and I think demand will be so strong that it will really support growth.”
Cash generation offers another advantage
Although Apple’s expected revenue and earnings growth remains slower than many AI-focused technology companies, investors increasingly value its financial discipline.
Apple is projected to generate nearly $140 billion in free cash flow this year, a record level that would represent more than 40% growth from 2025.
By comparison, Alphabet’s free cash flow is forecast to fall about 67% this year to roughly $21 billion as spending on AI infrastructure accelerates.
Analysts expect Apple’s revenue to rise nearly 15% in fiscal 2026, marking its strongest annual growth since the pandemic-driven electronics boom in 2021. Net income is forecast to increase 17%.
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