This might surprise anyone who\u2019s listened to Tim Cook preach the good word, but by the standards of technology companies Apple is perceived as being mildly anti-AI. And in some ways that\u2019s a good thing.<\/p>\n
In early summer the company\u2019s shares enjoyed a $600 billion rally thanks to what Bloomberg described as \u201crising unease about the prospects for heavy spending on AI paying off.\u201d All of a sudden investors liked the fact that Apple decided not to spend a fortune on datacenters.<\/p>\n
It\u2019s all about balance. Thanks to a nuanced strategy, Apple was part of the AI conversation without plunging into AI investment as recklessly as rivals such as Microsoft and Google. It has also been relatively unscathed by the technology\u2019s legal entanglements and public backlash.<\/p>\n
However, the stock market is nothing if not capricious, and this month the script has flipped. Once again, investors are feeling bullish about AI spending, with the result that Apple stock is down and Microsoft\/Google\/Amazon stocks are up.<\/p>\n
\u201cSince closing at a record high on July 28, Apple shares have fallen 10%,\u201d Bloomberg reports this week. Apple, the site notes, is one of the 25 worst-performing stocks in the S&P 500 Index over the past three weeks. Essentially, what\u2019s happened is that Apple has become the antithesis of the market as a whole. In July, the Nasdaq fell, and Apple rallied; in August, the Nasdaq rallied, and Apple fell. This gives an idea of how much of an outlier the Cupertino AI strategy really is.<\/p>\n
It\u2019s notable that the drop has followed Apple\u2019s Q3 earnings results, which were the highest ever for a June quarter. However, Wall Street is all about what\u2019s happening tomorrow, not what happened yesterday.<\/p>\n
\u201c[Apple\u2019s] correlation to the chip index is the lowest in data going back to 1994 and recently flipped to negative,\u201d Bloomberg adds, \u201cmeaning it\u2019s moving in the opposite direction of semiconductor stocks.\u201d<\/p>\n
Investor perception of AI is clearly precarious, and it\u2019s possible that September will see the script flip back again. But that month contains other complications: namely, the expected launch of a raft of important Apple products. And this is where the AI boom (or bubble, depending on your point of view) may hurt Apple beyond the share price. The fact that everyone else has been feverishly building datacenters means memory prices have gone through the roof, and that may necessitate higher-than-expected prices for the iPhone 18 Pro and iPhone Ultra.<\/p>\n
In fact, the dearest (but very private) wish of incoming Apple CEO John Ternus may be for AI to experience a crash\u2013an event which would harm Apple in some ways, but its rivals much more.<\/p>\n
Or, to use the more business-centric language of Prime Capital portfolio manager Clayton Allison, \u201cIf we see the AI trade unwind again, as we\u2019ve already seen this year, Apple\u2019s lack of correlation will work in its favor by muting downside.\u201d<\/p>\n