MW Why Apple's stock has held ground as the 'Magnificent Seven' have faltered

By Therese Poletti

Wall Street seems to like the company's measured approach to AI spending and its opportunity to mitigate potential tariff impacts

Apple Inc.'s stock outperformed all of its "Magnificent Seven" peers in the month through Thursday, while Tesla Inc.'s stock performed the worst.

Shares of Apple $(AAPL)$ were down only fractionally over that span, which also corresponds to when the DeepSeek news began getting mainstream attention. The other large technology stocks within the Magnificent Seven grouping have seen steeper declines, according to FactSet data.

Melius Research analyst Ben Reitzes said that he believed Apple (AAPL) has become a "safe haven" since "DeepSeek Monday," or Jan. 27, when word of the Chinese startup's lower-cost artificial-intelligence model roiled global markets.

"It is now evident that costs are going down fast across many AI models, beyond just DeepSeek," Reitzes said in a note to clients. "Apple never took the [capital-expenditure] plunge and its services margin should benefit greatly from lower costs of running AI in the cloud."

He also pointed out that if more AI inferencing is going to get done at theedge, on devices like smartphones, it will require more powerful iPhones, with higher average selling prices. That's another potential benefit to Apple.

Earlier this month, Apple launched its new iPhone 16e at a lower price point than its other recent smartphones. The phone has AI features, although its price tag was higher than Wall Street had expected.

"What's a bit surprising is how well Apple is acting in the face of tariff uncertainty and geopolitical tensions," Reitzes added. He also pointed out that Apple has pricing levers it can pull to offset at least a portion of President Donald Trump's tariffs.

See also: Apple may have to raise prices of the iPhone to offset tariffs, says BofA

Reitzes has an equal-weight rating on Apple shares, which are off fractionally in Friday's premarket action.

Tesla Inc.'s stock $(TSLA)$ has been the worst performer among the Magnificent Seven over the past month, dropping 29%. Investors have been worried about Chief Executive Elon Musk's role in the Trump administration and its potential impact on Tesla sales. There's also been recent concern about sales pressure in Europe.

-Therese Poletti

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February 28, 2025 09:38 ET (14:38 GMT)

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