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Apple briefly reclaimed the title of the world's most valuable public company this week. Its market cap hit $4.95T on Monday, edging past Nvidia, which fell nearly 5% on the same day.
Investors worried about AI spending costs rotated out of semiconductor and AI-heavy names into what one analyst called a "flight to safety." Nvidia stumbled and Apple caught the fallout.
"Apple is a little bit of a flight to safety. People see the AI trade is volatile, and they see Apple as almost like owning an index."
Daniel Newman, Futurum Group
Apple has largely stayed on the sidelines of the AI infrastructure race. Its peers are spending hundreds of billions of dollars building data centers and developing AI models. Apple is using AI models and cloud computing services from Google for its own products instead.
Not everyone on Wall Street is celebrating. KeyBanc analyst Brandon Nispel rates the stock Underweight, with a $250 price target. That implies a 26% drop from Monday's close.
His concern centers on iPhone demand. Memory chip costs are rising sharply, and Apple may need to raise iPhone prices to protect its margins.
Weak unit sales would ripple directly into services revenue, including iCloud and Apple Music, since those products depend on an active and growing device base.
Apple's stock is also trading at 38 times expected earnings for the current fiscal year. That's a significant premium to its five-year average. The stock has already rallied 24% this year.
The same week Apple topped the valuation charts, it launched Apple Upgrade, a new leasing program for iPhones and other devices in partnership with Klarna.
Customers can lease an iPhone for as little as $17.99 per month on a 24-month term. Apple Watch leases start at $11.99 per month, Mac leases start at $24.99 per month, and iPad leases start at $11.99 per month.
The program requires a soft credit check, which doesn't affect a customer's credit score. No security deposit is required. At the end of the lease, customers can return the device, buy it outright, or upgrade to a newer model.
Apple is also discontinuing its older iPhone Upgrade Program in the US as part of this transition.
The context matters. Apple raised iPad and Mac prices by at least $100 in June, citing a global memory crunch. Some models increased by more than $1K.
Analysts expect iPhone price hikes later this year. Morgan Stanley estimates Apple may need to raise the iPhone 18 Pro price by roughly $200 to preserve gross margin.
Component-level analysis from TechInsights suggests higher memory costs could add as much as $300 to an iPhone's bill of materials.
The lease program is designed to soften the blow of those price increases. A two-year lease on an iPhone 17 Pro costs $31.99 per month.
That same phone carries a purchase price of $1,099. The monthly number feels manageable even if the total cost of the lease doesn't represent a discount.
Analysts at IDC have noted that most Apple customers in the US are already buying on installment plans or trade-ins.
The new program also targets a structural problem: the average iPhone replacement cycle has stretched to nearly four years, according to Bernstein estimates. A lease structure with a built-in upgrade path at month 24 creates a natural incentive to upgrade sooner.
Apple is set to report third-quarter earnings Thursday. It will be CEO Tim Cook's final earnings call before he transitions to executive chairman.
