Apple’s Cash Flow Machine Makes It Investors’ Favorite AI Hedge

(Bloomberg) -- It's become one of the most reliable trades in the stock market as sentiment toward artificial intelligence swings wildly: Whatever AI stocks do, Apple Inc. does the opposite.

The iPhone maker's stock is up 27% in 2026, making it the biggest contributor to the S&P 500 Index's 13% climb. It's also by far the best performer among the Magnificent Seven technology giants this year, a stark reversal from 2025, when its 8% gain put it near the bottom of the group.

The reason for the divergence is fairly simple. While most mega-cap tech companies are spending wildly on AI infrastructure, Apple is largely sitting it out and instead focusing on what it historically does best, creating products that get consumers buzzing, like its new foldable iPhone Duo. With Wall Street's view toward AI capital expenditures seemingly in constant flux, the company's shares have become investors' preferred method for staying in Big Tech while avoiding some of the group's ups and downs.

"Apple is a very liquid hedge against AI volatility, and it's a great position to have if you're starting to get worried about AI but still want tech exposure," said Jordan McCall, senior portfolio manager at Russell Investments, which has $418 billion in assets and owns the company's shares in multiple portfolios. "Apple is a flight to safety when the market gets nervous."

Investors are searching for safety because sentiment around AI is shifting so quickly. Shares of the big spenders like Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc., and the chipmakers at the heart of AI infrastructure, rise and fall as Wall Street debates when and if the hundreds of billions in capital expenditures will pay off in a big way. Apple has an increasingly negative correlation to semiconductor stocks and often moves in the opposite direction of its mega-cap peers.

The dynamic was apparent last week, when concerns about cloud computing provider CoreWeave Inc.'s debt spurred widespread selling of AI stocks. The Philadelphia Stock Exchange Semiconductor index, better known as the SOX, tumbled more than 11%, marking its worst week since April 2025, while an index of Magnificent Seven stocks sank 3.1%. Apple, meanwhile, rose 2% as the company said demand for the Duo was "nothing short of extraordinary."