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Apple's Untethered Rally: Outpacing AI Frenzy
18 Feb
Summary
- Apple's stock correlation to Nasdaq 100 is at its lowest since 2006.
- Company's decision to largely skip AI race makes it an outlier.
- Apple reported record quarterly sales, with iPhone strength cited.
Apple Inc. is experiencing its lowest correlation to the Nasdaq 100 Index in nearly two decades, reaching a 0.21 reading as of last week, the lowest since 2006. This divergence stems from Apple's measured approach to the current artificial intelligence boom, making it an outlier among its tech rivals.
This strategy has proven beneficial for investors seeking stability amidst AI-driven market swings. Unlike many competitors, Apple is not heavily investing in AI capital expenditures nor does it have major business lines immediately threatened by AI advancements. The company is reportedly accelerating its development of three AI-powered hardware devices.
Recent financial results further bolster Apple's position, with record quarterly sales reported, notably driven by strength in its iPhone product line. The company also provided an optimistic outlook for the current quarter, with a product launch event anticipated in the coming weeks.
Despite recent volatility, including an 8% slump last week, Apple's stock has shown resilience. Analysts suggest that while its upside might be limited in a tech rebound, its insulation from AI-related risks provides a defensive quality. However, the stock's valuation remains relatively high, trading at approximately 30 times estimated earnings for the next year.
