Apple Stock Outperforms Big Tech Peers During Selloff

Apple reported fiscal 2025 capital expenditures of $12.72 billion. (Getty Images)

Key Points

• Apple stock declined 0.2% on Wednesday, outperforming other Magnificent Seven stocks amid a tech sector downturn.
• The Nasdaq Composite fell 2.4% on Thursday, marking its largest one-day drop since October 10.
• Investors are rotating out of mega-cap tech due to high AI spending and valuations, favoring sectors like industrials and financials.

Apple stock was down slightly on Wednesday, but still performing better than most of its Magnificent Seven peers as Wall Street rotates its investments out of tech names that are spending big on artificial intelligence.

The stock market took a hit on Thursday as investors turned their focus from the government shutdown to concerns that the Federal Reserve wouldn’t be cutting interest rates again in December. On top of those concerns, there was a continued decline in tech stocks as investors worry about hefty AI spending and high valuations.

The tech-heavy Nasdaq Composite fell 2.3% on Thursday, its worst one-day decline since Oct. 10, according to Dow Jones Market Data.

All of the Magnificent Seven stocks—a grouping of tech companies expected to benefit from the future capabilities of AI—dropped on Thursday. Tesla stock dropped 6.6%, Nvidia fell 3.6%, Alphabet dropped 2.8%, Amazon.com was down 2.7%, Microsoft was off 1.5%. Meta Platforms closed up 0.1% after spending most of the day in the red. A Wedbush Securities analyst named the stock as a top pick on Thursday.

“We’re seeing a classic rotation under way. Investors are taking some profits in mega-cap tech after an extended AI driven run and reallocating toward more reasonably valued sectors including industrials, financials, energy, and healthcare,” David Miller, CIO and senior portfolio manager at Catalyst Funds, wrote on Thursday.

Apple shares were off just 0.2%.

Investors might be viewing shares of the iPhone maker as less risky when compared to its big tech peers. One reason is its different approach to spending. The company reported fiscal 2025 capital expenditures of $12.72 billion on Oct. 30. That’s a significantly smaller figure than some other mega-cap tech companies who have committed to investing tens of billions on AI.

Meta said on Oct. 29 that it now expects around $71 billion in AI spending for the year, up from the $69 billion it previously expected. Meanwhile, Amazon said it expects capital expenditures to come in at $125 billion for the full year, while Alphabet expects to spend between $91 billion to $93 billion.

Apple stock still faces long-term risks. Rising cost-of-living pressures could weigh on its customers. And Apple has been slow to implement AI into its products. A highly anticipated update to Siri isn’t expected until next year, and recent reports indicate that Apple will partner with Google on AI tech.

Write to Angela Palumbo at angela.palumbo@dowjones.com