MW How Apple's stock has become a surprise winner during the $1.2 trillion tech wipeout

By Christine Ji

Apple has been long criticized for its lack of an AI strategy, but now the company's more measured approach to spending looks attractive

Apple reclaimed its spot as the world's second most valuable company this week.

Tech stocks have suffered in recent days, but one prominent name has managed to buck this trend: Apple.

Apple $(AAPL)$ is the only "Magnificent Seven" name in the green this week, with its shares up 6% as of Thursday morning. Over the same period, the Nasdaq COMP has shed 3%. And on Wednesday, Apple beat the Nasdaq by 4 percentage points, its largest one-day outperformance in over a year, according to Dow Jones Market Data.

It's an unexpected reversal of fortunes for the iPhone maker, whose stock has otherwise underperformed over the past year due to its reputation for being an artificial-intelligence laggard. Shares of Apple rose 8% in 2025, lagging behind the broader S&P 500 index's SPX 16% gain.

But Apple's more disciplined approach to AI spending is coming in handy in a week like this. The launch of a new legal tool from Anthropic on Tuesday intensified fears that AI would dismantle traditional software businesses, resulting in a selloff across software stocks that quickly spread to other areas of tech.

Additionally, as Big Tech names report earnings, many companies are boosting their capital-expenditure forecasts in a way that is sparking concerns about overspending on AI. Last week, Meta Platforms (META) announced a forecast for up to $135 billion in capex for 2026. And on Wednesday, Alphabet $(GOOGL)$ $(GOOG)$ said in its fourth-quarter earnings report that it could essentially double its AI investments in 2026, with capex of up to $185 billion.

See more: Software ate the world. Wall Street is now worried AI will eat software.

Since Tuesday, the selloff has wiped out over $1.2 trillion in market value from software and semiconductor companies, according to Dow Jones Market Data.

Apple shares' upward momentum was on full display Wednesday, when the iPhone maker reclaimed the title of the second-largest company by market capitalization, after Alphabet last month pushed Apple out of that position. Currently, Apple has a market cap of $4.04 trillion, narrowly beating Alphabet's market cap of $3.84 trillion.

Shares of Apple may be benefiting as investors move money out of software stocks and look for new opportunities within the tech sector, Andrew Graham, founder and portfolio manager at Jackson Square Capital, told MarketWatch over email. Anthropic's recent release has only added more fuel to a software-sector meltdown that's been going on since July. Software underperformance has intensified over the last six months, with the iShares Expanded Tech-Software Sector exchange-traded fund IGV lagging the S&P 500 by 36 percentage points.

Also aiding the ascent of Apple's stock is a strong earnings report from last Thursday. The company reported record iPhone sales and gave stronger-than-expected guidance for revenue and gross margins, debunking investor concerns that rising memory costs would reduce profitability in the near term, Graham said.

Shares of Apple were initially flat following the report, as the company didn't provide much clarity on its AI strategy or its partnership with Google to use Gemini for Apple Intelligence. The company has also received criticism for the partnership, with some analysts warning that Apple is making an unwise move in outsourcing its AI capabilities to Google. However, Apple's lower AI capex levels - the company is expected to spend $13 billion on capex in 2026 - have become an advantage as the spending patterns of Big Tech come under scrutiny.

Apple is a "software/hardware hybrid where the sum may be worth more than its parts," Graham said.

See more: Apple's stock rises as Tim Cook gives just enough detail on Wall Street's most burning question

-Christine Ji

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 05, 2026 11:31 ET (16:31 GMT)

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