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A hand holding a smartphone with the logos for Magnificent 7 companies_ Image by gguy via Shutterstock_ <\/p>\n
2025 is now drawing to a close, and while the broader markets are set to deliver double-digit returns for the third consecutive year, we saw a rotation of sorts. After leading the stock market rally from the front over the previous two years, the \u201cMagnificent 7\u201d stocks<\/a> took a back seat. And if not for the 65% rise in Alphabet<\/a> (GOOG)<\/a> (GOOGL)<\/a>, the group\u2019s weighted average returns would have trailed that of the tech-heavy Nasdaq Composite Index ($NASX)<\/a>. While some Magnificent 7 names, particularly Nvidia (NVDA)<\/a>, delivered triple-digit returns in 2023 and 2024, this year none have found a way even into the top 25 gainers in the broad-based S&P 500 Index ($SPX)<\/a>.<\/p>\n Based on our perception of the technology, we may or may not term the 2025 price action as the artificial intelligence (AI) bubble<\/a> bursting, but one thing was clear this year: investors are not buying into the ever-rising AI capex story and are increasingly getting worried about the toll they are taking on tech companies\u2019 cash flows.\u00a0<\/p>\n Apple Might Have Underinvested in AI<\/p>\n But things are not as straightforward, and just as markets are punishing companies for their overexuberance towards AI, underinvestment isn\u2019t getting rewarded either, with Apple (AAPL)<\/a> being a prime example.<\/p>\n Ever since the AI euphoria began in 2023, Apple has been trying to shed the perception that it is slacking on the technology<\/a> even as other tech companies race ahead. This is not to say that the Tim Cook-led company is resting on its past laurels and has taken several measures to catch up. Among others, Apple has gradually added AI features to its iPhones as part of \u201cApple Intelligence\u201d and plans to release the updated Siri next year.<\/p>\n It has increased its capex towards AI, and during the fiscal Q3 2025 earnings call in July<\/a>, Cook said that Apple is \u201creallocating a fair number of people to focus on AI features within the company.\u201d Without providing specifics, Cook discussed an \u201cexciting road map ahead\u201d for new AI products and did not rule out the possibility of a major acquisition to bolster its AI capabilities. I, however, have serious doubts about the company acquiring Perplexity<\/a>, as was previously rumored, given their vastly different approaches to customer privacy.<\/p>\n Privacy Has Been Apple\u2019s USP<\/p>\n Notably, one of the reasons Apple is running behind in AI is the company\u2019s focus on privacy, which is atypical for AI that feeds on massive amounts of data. However, I believe it could be the company\u2019s unique selling proposition (USP), as users concerned about\u00a0AI companies<\/a>\u00a0snooping on their data would find solace in the Apple ecosystem, which prioritizes user privacy at its core.<\/p>\n Overall, I would say that Apple took quite a balanced and measured approach towards AI, and while it did miss out on first-mover advantage, the Cupertino-based giant was never known for being one. Some of its most successful products, like the iPod, iPad, and iPhone, were launched when competitors were already offering competing products.\u00a0<\/p>\n Apple\u2019s Valuations Are Quite Rich<\/p>\n Apple was never really a bet on AI<\/a>, and the company\u2019s efforts to capitalize on the technology, which is being touted as the next big thing since the internet, leave a lot to be desired. The company, however, took baby steps in a typical Apple way and is trying to improvise upon what others are doing\u2014as the common adage about the company goes, \u201cApple doesn’t need to be first. They just need to be the best.\u201d\u00a0<\/p>\n That said, Apple would be one name to double down on if you are worried about an AI bubble, as the stock never really benefited from the AI rally and is therefore at the least risk in a crash. Apple could be a bastion of safety and could see buying interest if the long-feared AI bubble bursts. Otherwise, I don\u2019t see the stock outperforming the average Magnificent 7 peer by a significant margin in 2026. While strong expected sales of the iPhone 17<\/a> would keep sentiment buoyed, there is not much on the table at a forward price-to-earnings (P\/E) multiple<\/a> of around 34x.<\/p>\n AAPL Stock Forecast<\/p>\n The consensus view is not overtly bullish for AAPL stock either, and it is rated as a \u201cModerate Buy\u201d based on the consolidated ratings of 40 analysts tracked by Barchart. The stock\u2019s mean target price of $290.85 is just about 7% higher than current price levels. Among its Magnificent 7 peers, only Tesla (TSLA)<\/a> has a lower rating than Apple.<\/p>\n Mohit Oberoi<\/a><\/p>\n had a position in: AAPL<\/a> For more information please view the Barchart Disclosure Policy<\/p>\n![](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2025\/12\/cwos52ucuuzkitwp.png\")
www.barchart.com<\/a><\/p>\n![](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2025\/12\/cbmsjo1xbghurowb.png\")
www.barchart.com<\/a>
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\n On the date of publication,<\/p>\n
\n, NVDA<\/a>
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\n. All information and data in this article is solely for informational purposes.<\/p>\n