Apple shares surge 28% this year as investors steer clear of heavy artificial intelligence spending

Apple Inc. shares have climbed 28% so far in 2026, making the iPhone maker the biggest contributor to the S&P 500 Index's 12% gain and the top performer among the Magnificent Seven technology giants.

Market Shifts

This growth marks a major turnaround from 2025, when an 8% gain left Apple near the bottom of the group. The shift comes as investors look for ways to gain exposure to Big Tech without taking on the high risks of heavy artificial intelligence infrastructure spending. While peers like Microsoft, Amazon, Alphabet, and Meta Platforms spend billions on AI data centers and equipment, Apple focuses on consumer products such as the new foldable iPhone Duo.

Industry Volatility

Market anxiety has grown over whether massive AI spending will bring in enough money. Worries about debt at cloud computing firm CoreWeave recently sparked widespread selling across AI stocks. Last week, the semiconductor index, known as the SOX, dropped more than 11% for its worst weekly performance since April 2025, while an index of the Magnificent Seven fell 3.1%. In contrast, Apple shares rose 2% after the company called demand for the foldable iPhone Duo extraordinary.

Valuation Concerns

Despite strong free cash flow and steady earnings growth, Apple faces pressure from slower growth projections and a high stock valuation. The stock trades at 36 times estimated earnings over the past 12 months, marking its highest valuation multiple since January 2008. Bloomberg Intelligence data shows revenue growth is expected to slow to 9.7% in fiscal 2027 and 5.5% in fiscal 2028. BTIG analyst Krinsky suggests a chip stock rebound could cause Apple shares to pull back toward their 50-day moving average, which was 4.7% below the stock's recent closing price. Meanwhile, McCall noted that renewed enthusiasm for AI could reverse the current trend and lower demand for Apple.

Context

Large technology companies routinely adjust their capital spending priorities based on shifting market demand and emerging technological shifts. When investors grow cautious about high-cost capital projects, safer cash-generating assets often attract renewed interest.