Apple stock has had its share of ups and downs this year. But things have been much more pleasant lately, with the stock setting a new closing price record in more than a month during Thursday trading. In doing so, Apple stands out among the rest of the “Magnificent Seven.” The other six companies in the group (Amazon, Alphabet, Microsoft, Nvidia, Meta, and Tesla) all closed well below their all-time highs. For some companies (Microsoft, Meta, Tesla) you have to go back to last year to find yours. Other companies (Amazon, Alphabet, Nvidia) hit highs on various days in May and then fell back. Apple’s year-to-date profit of about 16.5% is also the highest among them (only Microsoft and Tesla will be in the red in 2026). So why is Apple an outlier among these $1 trillion-plus giants? Despite Friday’s modest pullback, why is it near highs while other stocks stare highs? The simple answer is that Wall Street will eventually reward Apple for its low-cost approach to the artificial intelligence race. At the same time, the Street is rethinking how it values other megacaps as customers prioritize efficient use of AI rather than maximalist thinking. The shift from “token maximization” to token optimization (tokens are the basic unit of AI computing) is a new chapter in the generative AI boom, with obvious ramifications for the stock market. Look at Apple’s chart. At a time of skepticism about other megacaps, you have to turn back the clock a few years to fully appreciate the love for Apple. ChatGPT launches on November 30, 2022 The catalyst for this entire technology revolution was the launch of OpenAI’s ChatGPT in late 2022. That’s a bit of an oversimplification, but in the wake of ChatGPT, Amazon, Google’s parent company Alphabet, Meta Platforms, and Microsoft began spending tens of billions of dollars to expand computing power and data centers while also working on AI-infused products. At different points in the process, each faced some degree of skepticism from Wall Street. But generally speaking, their spending was considered good and necessary. And because much of this money was spent on Nvidia’s cutting-edge AI chips and networking equipment, it was the biggest winner of them all. Apple was seen as falling behind the AI party. Perhaps the invitation got lost in the mail? Unlike Amazon, Microsoft, and Google, it didn’t have a cloud computing service that was inundated with AI-related demand. It also didn’t have large-scale language models (LLMs), the technology underlying ChatGPT and Anthropic’s Claude. Before Gemini, Google’s model wasn’t exactly beloved, but at least it was making progress. This was similar to the model of Meta and its Llama family, in which case it could indicate accelerating advertising growth as a result of investments in AI. Published by Apple Intelligence, June 10, 2024 Apple wanted to silence doubters at its annual Worldwide Developers Conference, known as WWDC, to be held in June 2024. At that time, the company announced a suite of AI features called Apple Intelligence, and the stock price soared in the lead-up to the event. The on-screen demo looked cool, but the reality months later was ugly. The rushed and unsuccessful release of Apple Intelligence revealed that Apple’s AI strategy is not fully fleshed out. While other companies, including startups like OpenAI and Anthropic, were developing new large-scale language models on a regular basis, the iPhone maker was still trying to figure it all out. And all LLM usage was flowing into the cloud provider’s coffers. iPhone 17 announced on September 19, 2025 Apple was essentially planning to roll out new AI software features in 2025, but that was also a year of tariff hurdles unrelated to AI. But the company’s success last year, with its new iPhone 17 hardware, highlighted its biggest advantage in the AI race. The company has already shipped billions of devices into the world. In fact, Apple stock dropped significantly as the popularity of the iPhone 17 became clear, which surprised some people on the street (but not us). A major development in Apple’s AI strategy came in January, when Google confirmed reports that it had signed a deal with Apple to license its Gemini model and cloud technology. In exchange for reportedly paying $1 billion a year, Apple will be able to build on Gemini and develop its own models and better Siri. New Siri will be introduced on June 8, 2026 Sure, Apple already partnered with ChatGPT, but that was more of a Band-Aid for Siri than a complete AI overhaul of the iPhone’s native smart assistant. With Apple leveraging Gemini, the market is starting to get a better feel for what Apple Intelligence and Siri will look like later this year. There is a growing realization that Apple may not be the first, but it is already the only company with an AI outlet in the pockets of around 1.5 billion people around the world: the iPhone. Given how much your mobile device knows about you, The Street recognized that if Apple were able to execute a partnership with Gemini, it could leapfrog everyone else in terms of AI product adoption. Apple unveiled its revamped AI suite at WWDC in June. The stock suffered some profit-taking after the event, but we like the outcome. The full rollout of improved Apple Intelligence is expected in the fall, when Apple releases its latest operating system for iPhone, Mac, iPad, and Apple Watch. What’s next? Execution remains a big issue, but doubts surrounding Apple’s strategy have largely subsided. Apple is doing with AI what we did with the search engine. Instead of competing with Google, they partnered with it. As a result, Apple could continue to focus on selling as many iPhones as possible, and Google was charged with providing the best Google search experience possible. The two companies work together and each is responsible for doing what they do best. The result is a best-in-class product and an investment that makes sense for both companies. The same thing is happening now with AI, and Wall Street is seeing the light. Instead of punishing the company for not participating in the LLM arms race, Apple is being rewarded for being one of the only mega-cap companies that has kept its free cash flow intact. We are not competing to be the best LLM provider on the planet. Instead, the company aims to become the broadest provider of AI-enabled devices, but thanks to the phenomenal success of the iPhone, the company is already starting with a huge advantage. This is consistent with broader discussions around token optimization and likely explains Apple’s recent share price rally following a pullback starting in June. With the rapid advancement of LLM, businesses and consumers alike are beginning to realize that its capabilities are beginning to exceed the needs of most users. In other words, most users don’t need state-of-the-art AI models, and as a result, a more commodity-like model may actually provide better value for most users. That works to Apple’s advantage. If Apple were to adopt a non-frontier model and capture personal data from an iPhone, it could prove to be more valuable to users than a frontier model that does not have access to that data. Even better, this means Apple doesn’t have to rush out new, more capable models every two months to catch up. This is in contrast to OpenAI, Anthropic, Google, and Meta, who frequently release models. This reduces costs, increases value for consumers, and maintains financial health. In addition to AI execution, the other big question surrounding Apple’s stock price is high memory prices (which is also a question for mega-cap companies that pay for memory with AI chips). However, Apple stock has largely been able to overcome this headwind, and there may be two reasons why. First, Apple tends to sell more premium products to wealthier consumers. As a result, Apple has the pricing power necessary to overcome its own high costs with minimal demand erosion (at least less demand erosion than when catering to lower-income consumers), especially when considering service provider subsidies. This helps protect profit margins despite increased input costs. Second, while Apple has raised prices in the short term to protect its profit margins, Apple rarely lowers its selling prices, so lowering memory prices in the future should actually lead to margin expansion. First, they will raise the prices of Macs and iPads, but the big test will be how the prices of iPhones change. More details about this will be revealed at the company’s annual launch event in the fall. (Admittedly, any easing in memory prices is likely to be a long way off, so it doesn’t make sense to invest based on it, but it’s something to keep in mind for long-term investors.) Conclusion It’s a 20/20 split on results, but the reality is that Apple won because it stayed true to itself. While Apple is certainly innovative, it has always done better by patiently observing market trends before jumping in with better, smarter products. It was a symbol of Steve Jobs’ rebirth of the company, led by outgoing CEO Tim Cook and soon-to-be CEO John Ternas. The iPod wasn’t the first MP3 player. The iPhone wasn’t the first smartphone. The iPad wasn’t the first tablet. The Apple Watch wasn’t the first wrist-worn smartwatch or health tracker, and AirPods weren’t the first wireless headphones. Yet all of these products continued to be hugely successful as Apple took the time to refine existing products on the market while integrating them into a frictionless ecosystem that made each product even more valuable than anything anyone else could bring to market. If there’s one failure, it’s the Vision Pro in the VR headset market. But overall, it’s hard to argue with the late and excellent results and the beginner and mediocre ones. With the same strategy in place for the company’s AI ambitions, it’s no wonder the Street turned around and rewarded the company with an all-time high stock price. The doubters were proven wrong. Along the way, Apple once again reminded us why it’s one of the world’s most valuable companies and why its stock should be held for the long term, not traded. (Jim Cramer’s charitable trusts are long AAPL, AMZN, GOOGL, META, MSFT, NVDA. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
