‘AI Laggard’ Apple Is Sitting Pretty, But AAPL Stock Might Be Running Out of Room to Outperform

Apple stock has recently outperformed the Nasdaq 100 Index, reversing its underperformance in the first half of the year. The turnaround comes after investors grew wary of tech companies' growing capital expenditures (capex) to build AI infrastructure. Alphabet, Amazon, Tesla, and Meta Platforms have increased their 2026 capex budgets, while Apple has been criticized for under-spending on AI.

Microsoft, however, has stood out for maintaining its capex guidance and expecting positive free cash flows next year. Apple's stock decline following its earnings was due to supply-side issues and a guidance miss, not its capex strategy. The stock has since rebounded, up nearly 21% for the year, the highest among the Magnificent 7 stocks.

Apple's partnership with OpenAI has soured after the iPhone maker accused the latter of misappropriating trade secrets. Apple is considering large language models (LLMs) and AI commoditization, potentially becoming a winner in the AI space by acquiring and integrating best solutions into its devices. However, the stock's forward P/E ratio of over 37x is the highest among the Magnificent 7, excluding Tesla.