Apple Emerges as Tech Diversification Play Amid AI Spending Concerns

Investors wary of heavy spending by US tech giants on AI infrastructure are turning to Apple as an alternative. The company offers exposure to technology without taking on the same level of risk associated with massive AI spending. Apple shares have risen 7% over the past month, while its capital expenditure (capex) for the first nine months stands at $6.8 billion.

Unlike major hyperscalers such as Amazon, Alphabet, and Meta, Apple is renting AI capacity rather than building it. These companies have spent between $30 billion and $54 billion in a single quarter, with collective capex expected to reach $600-725 billion this year. By contrast, Apple's approach allows investors to gain tech exposure without the risk of heavy AI infrastructure spending.

Apple's cash-generating abilities are another attractive aspect of its investment profile. The company has returned $62 billion in buybacks over nine months, which is why it's behaving as a hedge for some investors. However, experts caution that Apple should not be viewed solely as a hedge against technology stocks.

Vested Finance founder Viram Shah notes that while Apple can move differently when investor enthusiasm for AI changes, it remains a major technology company and can fluctuate in response to changing market conditions. OneCap co-founder Sandeep Nambiar also cautions that if AI becomes the primary layer people live inside, then renting it could mean renting one's future.