Why Apple Stock Might Be Spared If an AI Bubble Bursts

With stocks fluctuating last week on potential concerns over the valuation of artificial intelligence, investors may have noticed that much of Seven Wonders has been increasingly volatile while… apple (NASDAQ:AAPL) has behaved like a rock steady, holding its position at around $270 per share. While the initial positive post-earnings reaction has faded, I think investors have a lot to look forward to as strong early demand for the iPhone 17 translates into something even greater as we head into the holiday season.

To be sure, expectations of a strong holiday season on the horizon could very well translate into Apple shares ending the year with a bang, even in the face of growing doubts about AI spending. At this point, it is difficult to understand what will happen to high-tech trading as we enter the final stage.

• Apple (AAPL) held steady near $270 per share while other Magnificent Seven stocks face volatility on AI valuation concerns.

• Strong early demand for the iPhone 17 sets Apple up for a strong holiday season as the end of the year approaches.

• Apple’s measured AI approach and lack of hype may protect it from a correction compared to high-beta AI stocks like Nvidia and Palantir.

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However, it certainly feels like a tug-of-war between the bulls, who believe the AI ​​revolution will change the world, and the bears, like Dr. Michael Burry, who have put up a big contest against two of the biggest names in AI. I think Puri’s bearish bets are causing some investors to reevaluate where they stand at this point in the AI ​​bull market. I think these checkpoints are not a bad thing at all. Although an AI correction can occur without a bubble bursting that could lead to a market collapse, I believe some names will be more severely penalized than others.

For example, Nvidia (NASDAQ: NVDA) and Palantir (NASDAQ:PLTR) were big winners, and if the AI ​​trade turns upside down, these names could fold faster than the rest of the market. Really, this is to be expected for hyper-growth stocks with betas north of 2.2. After a few rough sessions for the two AI stars, one has to imagine that Burry’s big put options are already in the money.

In fact, with shares of Palantir, Puri’s biggest bearish bet, falling another 7% on Thursday, putting shares down just 16% from their pre-earnings all-time high, one could argue Puri has already won. Naturally, we have absolutely no idea whether Perry cashed his bets or not. We can only speculate at this point. But either way, I’m still of the opinion that last year’s big winners still have a tougher road ahead of them.

Meanwhile, I think Apple’s relative stability last week suggests that the former “late AI” company is poised to lead, not because it has a big language model (LLM) it can beat, or a super-intelligence team that can’t be stopped. Instead, it played the AI ​​game for the long term and refrained from taking the risk of overinvesting in the technology.

If the AI ​​trade goes south from here, I like the prospects for Apple stock, especially since the iPhone 17 is doing well, even without the massive Siri update (which will feature Google’s AI), which is due in the spring.

Although Apple is a serious player in the AI ​​space, it’s a name that doesn’t get as much hype as its peers. With a strong services business as well as a prudent, privacy-driven approach to AI that iPhone users are clearly patient enough to wait for (they wouldn’t be such huge buyers of devices if they weren’t willing to wait for Apple to handle AI, which I think will prove better), Apple stock certainly stands out as a Magnificent Seven name that I think is likely to hold up once the next AI-driven correction occurs.

At this point, I think Apple is well positioned to make the best margins on its AI investments. I think a use case-first approach may be the way to go as AI monetization becomes the next hot topic, if it isn’t already.

During the first half of the year, Apple’s “AI lag” sentiment weighed on its stock. However, once the tables turn, it may be Apple that stands tall as its more popular peers decline amid concerns about its AI valuation. Of course, there’s always a risk that Apple shares will decline anyway, but I don’t think the stock’s recent resilience should be ignored by investors.