Apple shares rose 0.99% on Friday, defying broader technology sector pressure sparked by a pullback in Nvidia shares.
The iPhone maker is increasingly drawing investors looking for a relatively defensive technology exposure amid uncertainty surrounding artificial intelligence titles, according to Bernstein analysts.
In a report published on Thursday, analysts led by Mark Newman said that Apple is less correlated with its large-capitalization technology peers and trades more alongside high-quality consumer companies.
“With little correlation with its large-cap tech peers, Apple is now trading more like high-quality consumer companies,” the Bernstein analysts said.
This appreciation arrives as Nvidia faces direction uncertainty following reports surrounding CEO Jensen Huang, while worries regarding massive capital expenditure requirements for AI infrastructure continue pressing technology values.
Unlike several other Magnificent Seven companies, Apple maintains relatively modest capital expenditure requirements.
Its capital expenditures account for under 2% of revenue, compared to the hundreds of billions committed by major tech corporations toward AI infrastructure.
Bernstein describes Apple as a consumer compounder, noting that its revenue growth, profit generation, and free cash flow profile increasingly resemble established consumer businesses.
The brokerage firm reiterated an outperform rating on Apple and maintained a price target of $380, implying roughly 7% upside potential from Thursday’s closing price.
Apple trades at approximately 37 times its expected 2027 earnings per share, roughly twice the anticipated earnings multiple of the broader market.
Among companies with market capitalizations above $200 billion and projected EPS growth below 15%, only Costco, Walmart, and General Electric trade at forward price-to-earnings multiples exceeding 30.
However, Apple’s projected annual revenue growth through 2029 sits at roughly 9%, compared to 7% for Costco and 5% for Walmart.
Bernstein also highlighted an estimated 3.1% free cash flow yield for Apple alongside expected share buybacks equivalent to 3% of its market capitalization in 2027 and 3.2% in 2028.
Operational performance continues supporting this valuation as iPhone revenue climbed 17% year-over-year to $57.6 billion during the fourth quarter of fiscal 2026, despite supply constraints.
The company registered quarterly iPhone revenue records and upgrade records worldwide, notably across the United States, China, and India.
The rollout of the iPhone Duo alongside the iPhone 18 Pro and Pro Max expanded its product portfolio and created extra upgrade opportunities.
Artificial intelligence also represents a prospective growth driver through planned Siri enhancements involving personalized assistance and improved contextualization that could motivate customers to migrate toward newer devices.
The company could also generate incremental revenue by offering more access to advanced server-based AI capabilities.
Its Services division delivers another monetization avenue backed by an active global footprint exceeding 2.5 billion devices supporting Apple Pay, iCloud+, Apple Music, and Apple TV.
Despite these defensive traits, Apple confronts operational hurdles including an expected gross margin decline to 45%–46% in the first quarter of fiscal 2027, down from 47.9% in the fourth quarter of fiscal 2026.
Rising memory costs and Siri AI spending contribute to this contraction alongside ongoing supply constraints affecting advanced semiconductor manufacturing capacity and memory components.
Regulatory examination regarding its App Store business model and third-party licensing agreements presents an additional risk, prompting Apple to project services revenue growth slowing to 8%–9% in the first quarter of fiscal 2027 from 10% in the preceding quarter.
