Apple's restraint in AI spending becomes a plus

Its rivals are coming under scrutiny as they invest large sums into the technology.

- RYAN VLASTELICA AND CARMEN REINICKE

APPLE IPHONE 17 models are on display in September at a company event on its campus in Cupertino, Calif.

(Nic Coury AFP/Getty Images)

Apple Inc. has faced plenty of criticism from Wall Street for not spending as aggressively on artificial intelligence as its Big Tech rivals. But that strategy is suddenly a blessing for the iPhone maker.

Investors are beginning to scrutinize the huge sums companies such as 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 reevaluated.

Although it’s still considered a potential AI winner, the company 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 trend is playing out in early Tuesday trading, as Apple shares are up 0.8% and the leading point gainer in the Standard & Poor's 500 index, while AI darlings Nvidia Corp., Meta and Microsoft are dragging the market down.

“The hedge is it’s still a technology company, but not an AI company,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “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?”