Apple doesn’t have an AI spending problem. It has an AI execution problem.
Apple isn’t falling far from the AI tree.
While all of the Magnificent 7 fell yesterday, one of them is decidedly not like the others.
Apple fell harder than the rest Thursday, down 5% and notching its worst day since last April. Yet it’s arguably the most insulated from fears about overspending on AI — the nominal reason for the overall market’s decline.
AI isn’t integral to Apple’s current success. The company just reported its best quarter ever without a fully functional AI product. And unlike many of its Big Tech peers, which are planning to spend hundreds of billions of dollars on data centers and GPUs, Apple’s capex actually declined last quarter. As a result, Apple, whose larger hardware business keeps its services arm more insulated from pure software headwinds, has largely avoided AI-related sell-offs.
That’s what makes this drubbing notable.
Apple’s problem isn’t overspending on AI. It’s under-delivering on it.
Earlier this year, Apple announced it would leverage Google’s Gemini AI model to power its iPhones — a move that should have upped its AI prowess without emptying its coffers. But repeated delays to iPhone AI features, including reports this week that key upgrades are being pushed back again, suggest execution — not spending — is the issue. Investors aren’t worried Apple is burning cash; they’re worried it’s falling behind.
There are expectations that Apple will deliver material AI monetization, with Wedbush Securities analyst Dan Ives suggesting that this could add $75 to $100 to its share price in the “coming few years,” but its track record so far is not inspiring any confidence.
That anxiety may help explain why Apple is now the most sold stock among retail investors this year. JPMorgan estimates retail investors have pulled a net $539 million from Apple — more than double the next most sold name. Retail traders aren’t reacting to capex discipline or FTC warning letters about Apple News. They’re reacting to momentum, and right now, Apple’s AI story lacks it.
