AI's unexpected winner

After a rough stretch marked by underwhelming AI announcements, soaring memory prices squeezing margins, and now a high-profile lawsuit with OpenAI, Apple has staged a remarkable comeback. Shares rose 0.63% today to a record intra-day high, making Apple the best-performing Magnificent Seven stock this year, up 16.72% in 2026.

Part of that optimism stems from Apple’s core business: Revenue is expected to grow nearly 15% in fiscal 2026—its fastest annual expansion since 2021—as investors bet consumers will upgrade to a new product lineup, including Apple’s first foldable iPhone model expected to launch in September. In fact, the company has reportedly increased its production target for the foldable iPhone to roughly 10 million, up from 7 to 8 million.

Another catalyst is Apple’s restrained AI strategy. While rivals continue pouring tens of billions into AI infrastructure, Apple has largely stayed on the sidelines, preserving cash. The company is expected to generate a record $140 billion in free cash flow this year, about 40% higher than 2025. Alphabet, meanwhile, is expected to see free cash flow plunge by about two-thirds.

The tab keeps growing

At the same time investors are applauding Apple’s muted AI investments, they’re worrying about Meta’s massive AI spending—and today’s announcement only added to those concerns. The company raised its planned investment in its Louisiana AI campus to $50 billion, up from the original $10 billion, as it works to double its computing capacity to 14 gigawatts next year. Shares sank 1.86% today.

Meta was already expected to shell out between $125 billion to $145 billion this year, and with more money now flowing out, investors have to wonder whether all that spending will ultimately pay off. JPMorgan analyst Doug Anmuth recently reiterated a Neutral rating on Meta, arguing that while the company’s latest Muse Spark AI model is encouraging, it has yet to demonstrate the broader adoption needed to justify the company’s rapidly growing AI bill.

Wall Street is also becoming wary of Big Tech’s borrowing spree. So far this year, Alphabet, Amazon, Meta, Oracle, Nvidia, and SpaceX have already issued about $244 billion of bonds, more than double last year’s $108 billion, per Dealogic. The race to raise money is increasing borrowing costs, while these bonds aren’t selling like they once were as investors anticipate more debt issuance ahead.

Seoul selloff

Big Tech’s AI spending isn’t the only headwind. The sector is also increasingly tied to South Korea’s market, where SK Hynix plunged 15% as investors took profits following its Nasdaq debut. While the company’s US shares ended the day flat, the damage was already done, and the selloff spread to US memory stocks, sending SanDisk, Western Digital, and Micron down 12.63%, 4.64%, and 4.32%, respectively.

That makes Apple’s gains today even more impressive. While everyone else races toward an AI finish line that may not even exist, Apple is busy doing what it has always done best: selling iPhones.—SY