Bernstein Names Apple a Defensive Asset Amid AI Sector Risks

Bernstein has identified Apple (AAPL) as relatively resilient to risks in the market of companies actively investing in artificial intelligence (AI). Analyst Mark Newman believes that the iPhone maker is less dependent on building data centers compared to major cloud companies. On November 12, Bernstein maintained an "outperform" rating for Apple shares with a target price of $380.

Why Bernstein Considers Apple Less Vulnerable

According to Bernstein, Apple's capital expenditures amount to about 2% of its revenue. For fiscal year 2026, the company reported $9.04 billion in capital expenditures with revenue of $478.83 billion. Therefore, analysts believe Apple is less reliant on large-scale investments in computing power.

In January, Apple and Google announced a collaboration: future models of Apple Foundation Models will rely on Gemini technologies. Meanwhile, Apple Intelligence functions can operate on devices or within Apple's secure cloud infrastructure. Newman believes this approach reduces risks when cutting investments in AI servers, but does not eliminate them entirely.

Apple's Stock Valuation Reaches Record Level

According to Bernstein's calculations, Apple shares are trading at approximately 37 times the projected annual earnings per share for the calendar year 2027. This is a record P/E ratio – the price-to-earnings ratio. Among large U.S. companies with expected earnings growth of less than 15%, Costco, Walmart, and GE also have such high multiples.

Newman explains the valuation by the resilience of demand and customer loyalty to the brand. According to him, about 90% of iPhone owners stick with Apple when upgrading their smartphone approximately every four years. The analyst suggests that the decline in valuations of AI sector companies may provide Apple with acquisition opportunities. However, the high stock valuation remains sensitive to changes in profit expectations.