Escape from the AI arms race storm! Wall Street funds surge towards the "king of cash", Apple Inc. (AAPL.US), with a 20-day skyrocketing market value of $600 billion.

Notice that, due to concerns about spending on artificial intelligence, dragging down shares of chip manufacturers and cloud computing giants, investors are now flocking back to Apple Inc. (AAPL.US). The iPhone maker's stock price experienced a sharp drop last month following a disappointing demonstration of future AI capabilities, but has rebounded by 15% since hitting bottom on June 25, increasing its market value by nearly $600 billion and pushing its stock price back to historic highs. During the same period, the Philadelphia Semiconductor Index fell by 7%, the S&P 500 Index rose by 3%, and the tech-heavy Nasdaq 100 Index only rose by 1.3%. The reversal of the stock reflects the market's growing concern about whether high AI spending will yield returns, and Apple Inc.'s decision not to participate in the data center arms race is increasingly seen as an asset rather than a liability, despite its AI products repeatedly frustrating investors. Mark Branzo, Chief Investment Strategist at Rye Strategic Partners, said, "There is a game being played in the market, and Apple Inc. is benefiting from it because it has not been affected by the storm that other AI deals are facing," "There are concerns about what kind of return large-scale enterprises can get from their AI spending, while some believe that the semiconductor sector has already rallied too much. The result is that investors are flocking back to Apple Inc., seeing it as a solid choice that avoids these risks." Apple Inc.'s stock price quickly rebounded after a sharp drop in June Despite recent concerns about the sustainability of AI computing spending, the Philadelphia Semiconductor Index still rose by 83% in 2026, poised to achieve its best annual performance since 1999. However, Apple Inc.'s 16% gain this year makes it the best performer among the so-called "Big Seven" tech giants, which also include NVIDIA Corporation, Alphabet Inc. Class C parent company Alphabet, Microsoft Corporation, Amazon.com, Inc., Meta, and Tesla, Inc. Alphabet and Amazon.com, Inc. have both fallen by more than 10% from their highs in May, while Microsoft Corporation's 20% drop in 2026 is likely to result in its worst annual performance since 2022. Considering that Apple Inc. is facing headwinds due to rapidly rising storage chip prices (which threaten the company's profit margins), its strong performance is even more impressive. In response, Apple Inc. raised prices for all Macs, iPads, and smart home devices on June 25, leading to the stock's largest single-day decline since April 2025. Although the price increase does not include iPhones, the company has hinted at the possibility of more price hikes in the future. It is reported that in order to obtain cheaper storage chips, Apple Inc. is negotiating chip purchases with two Chinese semiconductor manufacturers. Analysts optimistically believe that these measures will protect the company's profit margins, and argue that Apple Inc. is not as vulnerable as other hardware companies, as its customers are less likely to forgo purchasing devices due to price increases. "Long-term trends show that pricing has limited impact on sales opportunities over many years," wrote Morgan Stanley analyst Sameek Chatterjee in a report on July 7. "Apple Inc. has historically raised prices substantially across its entire product portfolio, and despite these price increases, its sales continue to expand." Meanwhile, investors are eyeing a potential catalyst in the form of the foldable iPhone expected to be released in September. The device is expected to come with a hefty price tag and may attract more customers to upgrade their phones. Earlier this month, Apple Inc. informed its suppliers that it is preparing to produce around 10 million units of the foldable iPhone this year, higher than the previous estimates of 7-8 million units. Louis Navellier, Chief Investment Officer at Navellier & Associates, said, "While Apple Inc. is immune to the weaknesses in AI, the main reason not to sell it is its potential to launch a huge hot product," "The pricing of the foldable phone will be very strong, enough to offset the impact of storage issues on profit margins, and I believe the demand will be very strong, truly supporting growth." Apple Inc.'s revenue for the 2026 fiscal year (ending on September 30) is expected to increase by nearly 15%. This would represent its fastest annual growth since 2021 when sales of electronic devices soared due to the pandemic. Net profit is expected to grow by 17%. Despite the company's profit and revenue growth being modest compared to its peers with mega market caps, its prudent spending approach means it is accumulating more cash while others are going in the opposite direction. Apple Inc.'s free cash flow this year is expected to reach a record $140 billion, up more than 40% from 2025. In comparison, Alphabet's free cash flow for the year is expected to decline by about 67% to $210 billion. Apple Inc.'s current trading price is significantly higher than its historical valuation Of course, investors are paying a premium for this. Apple Inc.'s price-to-earnings ratio, calculated based on estimated profits for the next 12 months, is 33 times, making it the most expensive stock among the "Big Seven" except for Tesla, Inc., and much higher than its average level of 23 times over the past decade. This is also a key reason why only 61% of Wall Street analysts tracking the stock recommended buying it, according to Bloomberg. In contrast, analysts covering Microsoft Corporation, Amazon.com, Inc., Meta, and NVIDIA Corporation have given buy ratings to 90% of these stocks. "I currently hold NVIDIA Corporation instead of Apple Inc., as NVIDIA Corporation's valuation looks more attractive," said Branzo from Rye. "However, as long as we are in a market full of uncertainty, Apple Inc.'s cash flow and micro-services business will help it gradually rise. If you think AI capital spending will continue to expand, then buy NVIDIA Corporation. But if you think it will slow down, Apple Inc. is the better choice." MSCI Emerging Markets Index Technology concentration rises Investors are rotating outside of AI winners in emerging markets, where just three tech stocks with a combined market value of $4.4 trillion have driven most of the returns.