"Investors are beginning to scrutinize the huge sums companies like OpenAI, Meta Platforms Inc. and Microsoft Corp. are spending on AI, leading to heavy volatility in what had been some of the year's biggest momentum plays. As a result, Apple's position is being re-evaluated. While it's still considered a potential AI winner, it doesn't carry the risk of heavy capital expenditures and it does have ample cash on its books. That makes Apple shares a potential haven within the technology industry if the AI trade unwinds further."
"The hedge is it's still a technology company, but not an AI company, Brian Mulberry, client portfolio manager at Zacks Investment Management, said. There is this positive feel for Apple that they don't have to answer the big question that everybody else does, which is: What is the return on your invested capital in all of these other areas? The thesis is simple."
"Apple has the least exposure of the Mag 7 to AI in terms of where it is spending money and how leveraged it is, said Brian Pollak, portfolio manager and head of the investment policy committee at Evercore. It is absolutely true that it is a potential beneficiary of AI without having to spend all the capital that its cohorts are."
Investors are scrutinizing massive AI spending by OpenAI, Meta and Microsoft, creating volatility among previously high-momentum tech stocks. Apple's lower direct investment in AI and substantial cash position reduce its exposure to heavy capital expenditures and related execution risks. Apple can incorporate AI features by leveraging models from other companies rather than funding extensive internal development. Portfolio managers characterize Apple as a technology company with limited AI leverage, making it a potential beneficiary of AI upside while avoiding the large capex burdens facing megacap peers. Apple’s fiscal-year capex is projected around $14 billion versus Microsoft’s more than $94 billion.
Read at www.mercurynews.com
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