Why Apple shares could be spared if an AI bubble bursts

As stocks wobbled last week on potential AI valuation concerns, investors may have noticed that much of the Magnificent Seven was increasingly volatile as Apple (NASDAQ: AAPL) has acted like a rock steady, maintaining its position at around $270 per share. Even though the initial positive reaction after earnings has faded, I think investors have a lot to look forward to as the initial strong demand for the iPhone 17 translates into something bigger as we approach the holiday season.

Without a doubt, expectations of a strong holiday season on the horizon could very well translate into an end to Apple’s stock year, even in the face of growing skepticism about AI spending. At this point, it’s difficult to predict what will happen to high-tech trading as we enter the home stretch.

• Apple (AAPL) held steady at nearly $270 per share, while other Magnificent Seven stocks face volatility due to AI valuation concerns.

• Strong initial demand for the iPhone 17 positions Apple for a strong holiday season before the end of the year.

• Apple’s measured approach to AI and lack of hype could protect it from a correction compared to high-beta AI stocks like Nvidia and Palantir.

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However, it certainly looks like a tug-of-war between the bulls, who believe the AI ​​revolution will change the world, and the bears, like Dr. Michael Burry, who made a big short sale against two of the biggest names in AI. I suspect Burry’s bearish bets are causing some investors to reassess their position at this point in the AI ​​bull market. Such checkpoints, I believe, are never a bad thing. While an AI correction can occur without bursting a market collapse bubble, I think some names will be penalized more heavily than others.

For example, Nvidia (NASDAQ:NVDA) and Palantir (NASDAQ:PLTR) have been big winners, and if the AI ​​business turns upside down, these names could be quicker to fold than the rest of the market. In fact, this is to be expected for hyper-growth stocks with betas greater than 2.2. After a few tough sessions with the two AI stars, one has to imagine that Burry’s big put options are already in the money.

Indeed, with Palantir, the biggest of Burry’s bearish bets, falling another 7% on Thursday, sending shares down just under 16% from its pre-earnings all-time high, one could argue that Burry has already won. Of course, we have no idea if Burry cashed in on his bets. We can only speculate at this point. Regardless, I still believe that the big winners of yesteryear will have a tougher road ahead.

Meanwhile, Apple’s relative stability over the past week suggests, I believe, that the former “AI laggard” is poised to take the lead, not because it has the Great Language Model (LLM) to beat, or the most unstoppable superintelligence team. Rather, it played a long game when it came to AI and avoided risking overinvestment in the technology.

If the AI ​​business heads south from here, I like the prospects for Apple stock, especially since the iPhone 17 is doing so well even without that massive Siri update (which will feature Google’s AI), due in the spring.

Although Apple is a serious player in the AI ​​space, it’s a name that doesn’t have as much hype as its peers. And with a rock-solid services business as well as a cautious, privacy-focused approach to AI that iPhone users are clearly patient enough to wait for (they wouldn’t have been big hardware buyers if they weren’t willing to wait for Apple’s approach to AI, which I think will turn out to be better), Apple stock certainly stands out as the name of the Magnificent Seven who I think is most likely to hold up once the next correction based on AI will take place.

At this point, I think Apple is well-positioned to achieve the best margins on its AI investments. I think its use case-driven approach could be the way forward as AI monetization becomes the next hot topic, if it hasn’t already.

During the first half, Apple’s “AI lag” sentiment weighed on its stock. However, once the tide turns, it may be Apple that stands out as its more high-profile peers backtrack over AI valuation concerns. Of course, there’s always a risk that Apple shares could be dragged down anyway, but I don’t think the stock’s recent resilience should be ignored by investors.