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Apple's limited AI infrastructure exposure could prove advantageous as the anti-AI trade gains traction.
Strong iPhone demand, Services growth and a solid cash position support Apple's outlook.
ETFs offer diversified exposure to Apple while helping mitigate company-specific risks.
Apple (AAPL - Free Report) has been the best-performing Magnificent Seven stock this year,gaining more than 27%. In comparison, Roundhill Magnificent Seven ETF (MAGS - Free Report) is up only 2.7% (at the time of writing). Microsoft Corp. (MSFT - Free Report) is up 13.3%, Meta (META - Free Report) is off 7%, Alphabet (GOOGL - Free Report) is down 10.7%, NVIDIA (NVDA - Free Report) is off 3.8% and Tesla (TSLA - Free Report) has plunged about 21.5%.
Apple’s golden days are likely to brighten further as Democrats win the midterm elections – an outcome viewed as a potential catalyst for the anti-AI trade.
Why Does AI Trade Fall Out of Favor?
The AI trade, which has powered much of Wall Street's bull-market rally, has been under pressure for quite some time. Concerns about generating adequate returns relative to the massive investments being made in AI, rising interest rate worries and the adverse impact of rogue AI agents on cybersecurity have kept AI investing under pressure over the past month.
Now, the space is likely to face another challenge following the Democrats' strong performance in the 2026 midterm elections. With concerns mounting over data center construction, energy consumption and regulatory hurdles, investors may want to consider diversifying into other sectors.
The Nasdaq Composite dropped 5.5% on Nov. 5, 2026, with the tech-heavy index closing in correction territory.
Why Is Apple a Good Tech Bet Now?
Among the Magnificent Seven stocks, Apple has been a laggard in the AI race so far, which has turned into a boon for the iPhone maker. Along with several Wall Street analysts, we also believe that the tech giant's earnings drivers are more closely tied to iPhone sales mix, pricing and Services growth than to large-scale data center construction and AI model development. With resilient product demand, Apple is likely to benefit from the Democratic victory more than its peers.
Apple Tightens Employee AI Budgets Amid Rising Costs
Apple is reportedly tightening spending limits on employees' use of AI tools as part of a broader cost-control drive, even as it seeks to make AI a bigger part of its business operations, as mentioned on Yahoo Finance.
Interestingly, Apple's spending is increasing at the company level despite tighter employee-level budgets.
The company reported a 32% jump in research and development expenses in fiscal 2026, largely due to higher infrastructure and AI-related costs. Overall operating expenses climbed 22% to $75.5 billion, accounting for 16% of total net sales.
Lower AI Spending Limits for Engineers
Apple recently reduced the daily AI spending allowance for some engineers to $200 from $300, according to people familiar with the matter. The company is now considering further cuts for certain engineering teams, potentially bringing their daily limits down to just $100.
Other departments already operate under a $100 daily cap. However, Apple is also considering lowering the limit for some of these teams to as little as $25. Employees who need higher budgets for their work can request special approval from senior management.
The company has not publicly commented on the changes.
Lower Memory Chip Costs in the Cards?
According to Amit Daryanani, analyst at Evercore ISI, the reasons why the tech giant could emerge as a potential beneficiary of the election results are twofold. As quoted on Yahoo Finance, Daryanani considers Apple a relatively defensive investment amid uncertainty surrounding Washington's political and regulatory landscape.
A second potential tailwind for the company stems from memory chip costs. Apple faced higher memory costs in the September quarter and expects further increases in the December quarter. The company expects these pressures to continue beyond December. This presents another potential tailwind from the Democratic Party's midterm election victory.
Greater scrutiny of AI infrastructure investments could slow the pace of data center expansion, moderate demand for memory chips and potentially ease pricing pressures across the semiconductor supply chain (read: Is a Democratic Victory Good News for Apple? ETFs to Consider).
Balancing AI Adoption With Cost Control
Apple's move reflects a wider trend across the technology industry. Companies that initially encouraged employees to experiment freely with AI are now paying closer attention to the costs involved.
AI services charge users based on tokens, which measure the amount of text and other data processed by a model. More advanced models generally cost more, while demanding tasks such as writing and debugging code can quickly consume large numbers of tokens.
Apple employees have access to several AI platforms, including Anthropic's Claude, OpenAI's ChatGPT and Google's Gemini. Some teams are now being encouraged to switch to cheaper models or use AI systems that run directly on their devices.
December Quarter Outlook
Apple's chief financial officer, Kevan Parekh, expects December-quarter revenues to increase 7-10% year over year, potentially making it the company's best quarter ever. Before the earnings release, the Zacks Consensus Estimate projected December-quarter sales growth of 5.73%.
The company expects Services revenue growth of 8-9%, while gross margin is projected at 45-46%, reflecting higher memory costs.
Decent Cash Position
Apple ended the quarter with $137 billion in cash and marketable securities against total debt of $80 billion. This is a key positive for Apple, particularly as some of its Magnificent Seven peers are experiencing cash flow pressures.
Why Buy Apple Shares With ETFs?
Against this backdrop, investors can gain exposure to Apple through a diversified ETF approach to minimize company-specific concentration risks. This approach allows investors to benefit from potential gains while limiting the impact of any sudden weakness in Apple shares caused by memory pricing, a potential decline in margins or weakness in China sales.
Meanwhile, investors can benefit from the recent political tailwind for Apple shares through ETFs. A solid holiday-quarter outlook and a strong cash position compared with other Big Tech peers are additional positives. With the AI trade currently faltering, Apple's limited AI infrastructure exposure could prove to be a boon at current levels.
ETFs in Focus
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) – Apple weight 18.20%
Fidelity MSCI Information Technology Index ETF (FTEC - Free Report) – Apple weight 15.4%
iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) – Apple weight 14.0%
View the Zacks #1 Rank List
Image: Bigstock
Is Apple the Best Mag-7 Stock Now? ETFs in Focus
Key Takeaways
Apple (AAPL - Free Report) has been the best-performing Magnificent Seven stock this year, gaining more than 27%. In comparison, Roundhill Magnificent Seven ETF (MAGS - Free Report) is up only 2.7% (at the time of writing). Microsoft Corp. (MSFT - Free Report) is up 13.3%, Meta (META - Free Report) is off 7%, Alphabet (GOOGL - Free Report) is down 10.7%, NVIDIA (NVDA - Free Report) is off 3.8% and Tesla (TSLA - Free Report) has plunged about 21.5%.
Apple’s golden days are likely to brighten further as Democrats win the midterm elections – an outcome viewed as a potential catalyst for the anti-AI trade.
Why Does AI Trade Fall Out of Favor?
The AI trade, which has powered much of Wall Street's bull-market rally, has been under pressure for quite some time. Concerns about generating adequate returns relative to the massive investments being made in AI, rising interest rate worries and the adverse impact of rogue AI agents on cybersecurity have kept AI investing under pressure over the past month.
Now, the space is likely to face another challenge following the Democrats' strong performance in the 2026 midterm elections. With concerns mounting over data center construction, energy consumption and regulatory hurdles, investors may want to consider diversifying into other sectors.
The Nasdaq Composite dropped 5.5% on Nov. 5, 2026, with the tech-heavy index closing in correction territory.
Why Is Apple a Good Tech Bet Now?
Among the Magnificent Seven stocks, Apple has been a laggard in the AI race so far, which has turned into a boon for the iPhone maker. Along with several Wall Street analysts, we also believe that the tech giant's earnings drivers are more closely tied to iPhone sales mix, pricing and Services growth than to large-scale data center construction and AI model development. With resilient product demand, Apple is likely to benefit from the Democratic victory more than its peers.
Apple Tightens Employee AI Budgets Amid Rising Costs
Apple is reportedly tightening spending limits on employees' use of AI tools as part of a broader cost-control drive, even as it seeks to make AI a bigger part of its business operations, as mentioned on Yahoo Finance.
Interestingly, Apple's spending is increasing at the company level despite tighter employee-level budgets.
The company reported a 32% jump in research and development expenses in fiscal 2026, largely due to higher infrastructure and AI-related costs. Overall operating expenses climbed 22% to $75.5 billion, accounting for 16% of total net sales.
Lower AI Spending Limits for Engineers
Apple recently reduced the daily AI spending allowance for some engineers to $200 from $300, according to people familiar with the matter. The company is now considering further cuts for certain engineering teams, potentially bringing their daily limits down to just $100.
Other departments already operate under a $100 daily cap. However, Apple is also considering lowering the limit for some of these teams to as little as $25. Employees who need higher budgets for their work can request special approval from senior management.
The company has not publicly commented on the changes.
Lower Memory Chip Costs in the Cards?
According to Amit Daryanani, analyst at Evercore ISI, the reasons why the tech giant could emerge as a potential beneficiary of the election results are twofold. As quoted on Yahoo Finance, Daryanani considers Apple a relatively defensive investment amid uncertainty surrounding Washington's political and regulatory landscape.
A second potential tailwind for the company stems from memory chip costs. Apple faced higher memory costs in the September quarter and expects further increases in the December quarter. The company expects these pressures to continue beyond December. This presents another potential tailwind from the Democratic Party's midterm election victory.
Greater scrutiny of AI infrastructure investments could slow the pace of data center expansion, moderate demand for memory chips and potentially ease pricing pressures across the semiconductor supply chain (read: Is a Democratic Victory Good News for Apple? ETFs to Consider).
Balancing AI Adoption With Cost Control
Apple's move reflects a wider trend across the technology industry. Companies that initially encouraged employees to experiment freely with AI are now paying closer attention to the costs involved.
AI services charge users based on tokens, which measure the amount of text and other data processed by a model. More advanced models generally cost more, while demanding tasks such as writing and debugging code can quickly consume large numbers of tokens.
Apple employees have access to several AI platforms, including Anthropic's Claude, OpenAI's ChatGPT and Google's Gemini. Some teams are now being encouraged to switch to cheaper models or use AI systems that run directly on their devices.
December Quarter Outlook
Apple's chief financial officer, Kevan Parekh, expects December-quarter revenues to increase 7-10% year over year, potentially making it the company's best quarter ever. Before the earnings release, the Zacks Consensus Estimate projected December-quarter sales growth of 5.73%.
The company expects Services revenue growth of 8-9%, while gross margin is projected at 45-46%, reflecting higher memory costs.
Decent Cash Position
Apple ended the quarter with $137 billion in cash and marketable securities against total debt of $80 billion. This is a key positive for Apple, particularly as some of its Magnificent Seven peers are experiencing cash flow pressures.
Why Buy Apple Shares With ETFs?
Against this backdrop, investors can gain exposure to Apple through a diversified ETF approach to minimize company-specific concentration risks. This approach allows investors to benefit from potential gains while limiting the impact of any sudden weakness in Apple shares caused by memory pricing, a potential decline in margins or weakness in China sales.
Meanwhile, investors can benefit from the recent political tailwind for Apple shares through ETFs. A solid holiday-quarter outlook and a strong cash position compared with other Big Tech peers are additional positives. With the AI trade currently faltering, Apple's limited AI infrastructure exposure could prove to be a boon at current levels.
ETFs in Focus
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) – Apple weight 18.20%
Fidelity MSCI Information Technology Index ETF (FTEC - Free Report) – Apple weight 15.4%
iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) – Apple weight 14.0%
VanEck Technology TruSector ETF (TRUT - Free Report) – Apple weight 13.6%