How Apple Became the Most Defensive Stock in the Market
The stock hit an all-time high Thursday as investors look for hedges against massive artificial-intelligence investments elsewhere in the market.
Shoring up a portfolio with defensive stocks typically means buying stable names from seemingly boring categories: Consumer staples, utilities, medical devices. These days, you can just buy Apple stock instead.
Whether by design or by luck, Apple’s relative inaction on artificial intelligence has made it the ultimate hedge in a market driven by AI investments. And as investors grow wary of ballooning capital outlays elsewhere in Big Tech, the iPhone maker’s stock has proven its worth.
Apple hit an all-time high of $316.22 on Thursday after a quiet and steady long-term climb. Shares are up 15% this year and 48% in the last 12 months—first and second in the Magnificent Seven, respectively—outpacing both the Nasdaq Composite and the S&P 500.
“No one admits they like or want to buy more AAPL,” Mizuho Securities analyst Jordan Klein wrote Friday. “But I get why more folks [are] looking at AAPL as a hedge or long idea.”The story of the tech market over the last two years goes something like this: AI labs like Anthropic and OpenAI need data centers; hyperscalers like Oracle and Amazon.com are investing historic sums to provide them; and that money is going to chip and server makers, memory and storage suppliers, and a host of other companies.
Apple doesn’t fit neatly into any of those categories. It doesn’t have a frontier AI model, a sprawling cloud business, or much in-demand hardware. Instead, it is carving out a lower-cost niche as a leader in “edge AI,” which involves embedding AI applications directly on its devices, with the help of Broadcom chips.
Analysts estimate Meta Platforms, Oracle, and Amazon will have negative free cash flow in 2026 because of their AI investments. Meanwhile, Apple is expected to produce $143 billion in free cash flow, up from $109 billion last year, per FactSet. Its capital expenditures will likely decline in 2026.
“[Apple] has definitely been out of favor, but carries a lot less direct near-term execution risk,” Klein wrote.
Source: Barron’s NB: The smart guys are not so smart.