Apple Stock Is Bucking The Trillion-Dollar Tech Rout — But Caution Still Prevails On Retail Street

As Big Tech capex and tech selloffs sour investor sentiment, Apple is emerging as a steady tech bet.

• Apple shares rose 6.4% this week, the best among the Mag 7 stocks; the benchmark Nasdaq dropped nearly 4%.
• Apple reported strong results last week, with its capex forecast a fraction of what its Big Tech peers plan to spend.
• Retail investors and analysts are cautiously optimistic amid strong iPhone 17 demand and pending the release of Google-powered AI features. 

Amid Wall Street’s tech rout, Apple is beginning to look rather attractive.

The iPhone maker has long been criticized for falling behind competitors in artificial intelligence development, and modest topline and share growth. However, as Big Tech’s eye-popping expenditure plans, AI-driven uncertainty for software firms, and fresh tech layoffs trigger a broad selloff, Apple's steady and grounded approach has come as a breather.

Apple shares rose 6.4% this week and are on track for their best week since last August.

The move is the best among Magnificent Seven peers amid a 3.9% in the tech-heavy Nasdaq 100 index this week. Over this period, the tech selloff is estimated to have wiped off $1 trillion in stock market value, according to Bloomberg.  

Strong iPhone 17 Sales, Low Capex

Apple gained investor confidence after it posted blowout December quarter results last week. iPhone sales rose 23% as the iPhone 17 lineup triggered scores of upgrades among users, helping bring in record revenue for Apple. The projected 13% to 16% higher sales in the March quarter, ahead of Wall Street’s 10% expectation.

What’s jumping out, however, is Apple’s capital spending. The company will increase capital expenditures by a mere 2.3% to $13 billion – a drop in the pond compared to the combined capex of Amazon, Microsoft, Alphabet, and Meta forecast to more than double to $620 billion.

Retail, Analyst Views On AAPL

“$AAPL will continue to rise because it's the only of the mag7 to not dump it's entire free cash flow into AI spend,” said a Stocktwits user. 

“Apple might have been criticized for being late... They were right, they were smart. Hats off Tim,” said another. 

There is also skepticism. “The (P/E) multiple is way too high, the growth is way too low and it's a matter of time before the Big Boys accumulate enough bag holders to drop this,” said a bearish user. “Be careful.”

Apple has a forward 12-month price-to-earnings ratio of 32.1, according to Koyfin. The figure is 29.8 for Amazon, 29.2 for Alphabet, 22.4 for Microsoft, and 22.2 for Meta. 

The retail sentiment for Apple on Stocktwits has mostly tracked ‘bullish’ and ‘extremely bullish’, before falling in the ‘bearish’ zone in the last two days amid the market selloff. 

Apple also re-entered the $4 trillion market cap club earlier this week, joining Nvidia, while Alphabet dropped out of it, and Microsoft’s valuation fell below $3 trillion.

Apple’s recent partnership with Google to power forthcoming AI features, alongside strong demand for the iPhone 17 line and a pickup in business in China, are driving optimism for the stock. The AI upgrades are expected to debut at Apple’s Worldwide Developer Conference in June. 

In related news, Bloomberg reported on Thursday that the company was scaling back plans for a virtual health coach, code-named Mulberry, as part of an effort to rethink its approach to the wellness services market.

The majority of Wall Street analysts are bullish on Apple; 29 of 47 have a ‘Buy’ or higher rating, while 16 recommend ‘Hold,’ according to Koyfin.

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