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Apple stock is Big Tech’s ‘safe haven’

MacDailyNews

Feb 18

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Apple’s shares outperformed every other Magnificent Seven stock on Tuesday, underscoring investors’ growing preference for the company amid a shift away from tech firms pouring massive funds into artificial intelligence.

Investor enthusiasm for Big Tech’s huge AI spending announcements has cooled considerably. Wall Street is now prioritizing actual returns as these expenditures continue to climb. Meanwhile, software stocks are under heavy pressure, with attention turning to the risk that AI could eventually replace tasks currently handled by specialized applications.

Angela Palumbo for Barron’s:
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“One of the reasons people loved investing in megacap technology was these are earnings and cash flow generating machines, and they’ve done it without a lot of fixed assets and a lot of fixed costs,” 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, and it’s adding a lot of fixed costs and fixed assets to these companies’ balance sheets.”
As Barron’s has previously reported, collective capital expenditures this year from Microsoft, Alphabet, Amazon.com, and Meta Platforms are expected to be about $650 billion.
“People do look at it [Apple] as a safe haven against this big AI spending, this ROI [return on investment] story, just because their capex is relatively low compared to other hyperscalers,” said Ryuta Makino, research analyst at Gabelli Funds.
Apple’s 2025 capital expenditures were $12.7 billion. Wall Street expects the company to report 2026 capex of $12.9 billion. In comparison, Meta said in January that it expects full-year capex to be between $115 billion and $135 billion…
“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,” Sosnick said.

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MacDailyNews Take: Just wait until Apple begins to release Apple Intelligence features underpinned with — but privacy-protected from — Google Gemini and things like Siri begin to actually work as well as, or even better than, people expect them to work in 2026. The sky’s the limit for Apple stock!

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