Apple rises about 29% this year, becoming the most resilient of the Magnificent Seven; Ternus demands stepped-up AI investment

Kechuang Daily reporter Li Jiayi, editor Mao Mingjiang, 2026-11-10 14:09

① The seven major U.S. tech giants diverged in performance: Apple gained about 29% year to date, while heavy investors in AI infrastructure such as Google, Meta, and Nvidia all saw their share prices pull back to varying degrees, and Tesla fell more than 20%. ② Analysts believe the market has begun to scrutinize AI giants' ROI and free cash flow strictly, and Apple's restrained AI pace is the key to its safe-haven status.

Kechuang Daily, November 10 (Reporter Li Jiayi) — In 2026, the seven major U.S. tech giants diverged in performance.

As of the close on November 10, U.S. Eastern Time, Apple had gained about 29% year to date, the only member to significantly outperform the S&P 500. By contrast, heavy investors in AI infrastructure such as Google, Meta, and Nvidia all saw their share prices pull back to varying degrees, and Tesla fell more than 20%.

Beyond the share-price surface, Apple's resilience does not stem from leading AI technology but from its "asset-light" financial foundation. While other giants were dragged into a cash-flow quagmire by hundreds of billions in capital expenditure, Apple, with extremely low capital expenditure and abundant free cash flow, secured its position as a safe-haven asset.

Why is Apple the most resilient?

According to a compilation by Kechuang Daily reporters, as of the close on November 9, U.S. Eastern Time, Apple had gained about 29% year to date, the only member among the seven giants to significantly outperform the S&P 500. Over the same period, Microsoft rose about 12%, Amazon rose about 15%, and Nvidia fell about 6%; Meta and Google fell about 3% and 8% respectively, and Tesla fell about 20%.

It is fair to say that Apple is currently the most resilient of the seven major U.S. tech giants. To understand Apple's resilience, one first needs to see clearly what the other tech giants experienced in 2026.

In the third quarter of 2026, the combined capital expenditure of Amazon, Alphabet (Google's parent company), Microsoft, and Meta reached $201.9 billion, and all four companies' full-year capital expenditure plans exceed $100 billion. Over the past three and a half years, these four companies' cumulative investment in AI infrastructure has exceeded $1 trillion, almost all of it directed at data centers, GPU clusters, and computing networks.

The cost of becoming asset-heavy has already emerged. In Q3 2026, Alphabet and Meta's free cash flow turned negative; Microsoft's free cash flow remained positive but fell 27% year on year; Amazon's free cash flow over the past 12 months was negative $42.4 billion.

The asset-heavy shift in capital expenditure changes not only the cash flow figures, but also the framework the market uses to price such companies. When depreciation begins to persistently erode profits and free cash flow turns from positive to negative, investors must keep answering the same question: when will this capital expenditure translate into returns? The market's pricing framework for such companies is also shifting from "high-margin software companies" to "infrastructure companies that require continuous investment to maintain operations."

On the other hand, Nvidia, at the other end of the AI chain, has very low capital expenditure of its own—only $6 billion in FY2026—yet its stock price has fallen about 6% this year. The reason is that, as the "shovel seller," Nvidia's performance is highly dependent on purchases by those four giants. When buyers face doubts about peak capital expenditure due to deteriorating free cash flow, the sustainability of Nvidia's orders is naturally called into question.

Tesla faces a different predicament. It is not involved in the arms race for large-model data centers, but its Q3 R&D expenses surged 69% to $2.76 billion, while operating profit fell 56% year on year to $718 million and operating margin dropped to 2.6%, compounded by declining deliveries in its core automotive business and pressure on revenue from its energy business. Tesla's AI narrative remains grand, but in the short term it will be hard to fill the hole left by falling profits in its core business.

By contrast, Apple has neither made heavy-asset investments as a buyer nor engaged in cyclical speculation as a seller. Its capital expenditure for the full fiscal year 2026 was only $9.04 billion, down 29% from $12.7 billion in the previous fiscal year. The financial report shows that Apple's full-year revenue was $478.8 billion, up 15% year on year; net profit was $132.2 billion, up 18% year on year; operating cash flow was $145.097 billion, up about 30% year on year; and free cash flow was $136 billion, up about 38% year on year.

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Zhang Yirui pointed out that the market is now strictly scrutinizing ROI and free cash flow for AI giants. "The pricing anchor for other giants lies in the cloud elasticity converted from high AI CapEx, while Apple's pricing anchor lies in the installed base of more than 2 billion active devices, high-margin service cash flow, and highly certain share buybacks."

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According to media reports, Apple's new CEO Ternus recently held a closed-door meeting with software chief Craig Federighi. Ternus expressed dissatisfaction with the company's current progress in the AI field and demanded that it should not be content with patching up the existing Siri, but instead needs to formulate a long-term plan.

It is reported that at the closed-door meeting, Ternus asked the software team to "quickly move beyond the stage of merely making necessary improvements to Siri." Apple is considering giving the voice assistant Siri stronger autonomous action capabilities, and a new version of Siri with agentic capabilities could be launched as early as 2027.

It is worth noting that Ternus had previously always maintained a cautious stance on artificial intelligence. In an interview with Wired magazine on October 30, he said, "We don't want to ship AI for AI's sake." Apple will embrace AI, but does not believe in putting it into products simply because the technology is trending.

Why can't Apple "sit still"? Because the competitive paradigm is shifting. OpenAI, Meta, and xAI have pushed the focus of competition from "better chat assistants" to "goal-driven agents," in which systems continuously track goals in the background and autonomously determine the next action, rather than waiting for users to issue instructions one at a time.

It is not that Apple has made no progress. The Siri AI launched by Apple in the U.S. market already has cross-app operation, screen awareness, and multi-step task execution capabilities, and is no longer a simple single-step instruction tool. But it still remains in a "request-response" mode: the user issues an instruction, Siri executes it, and then waits.

Among phone manufacturers, Huawei, Xiaomi, Honor, and others in the Chinese market have already gone through multiple rounds of iteration around on-device large models and system-level agents. However, Apple's China-market Apple Intelligence did not officially announce integration with Alibaba's Tongyi Qianwen until October 31, with the first batch of about 18 features to be rolled out with iOS 27.3 in December. These cover basic capabilities such as writing tools, real-time translation, photo erasure, and notification summaries, but this update does not include Siri AI or other next-generation Apple Intelligence features announced at WWDC 2026.

Internal pacing is also under pressure. According to media reports, Federighi's software department is accustomed to planning on a 12-to-18-month cycle, while the hardware department lays out plans years in advance; this mismatch easily makes first-release versions more conservative. Apple has already adjusted the initial pace for iOS/iPadOS 28 and macOS 28 from "four weeks of coding, four weeks of integration" to "six weeks of coding, two weeks of integration."

Currently, the AI investments of tech giants are mainly capital expenditures—buying GPUs and building data centers. In financial terms, this money is not counted as a current-period cost, but instead becomes a "fixed asset" that is gradually amortized over the next 5-10 years through annual depreciation. As a result, the giants' free cash flow has sharply turned negative, and they face the risk of massive future depreciation weighing on profits.

In contrast, Apple's increased spending mainly consists of R&D expenses, chip BOM costs, and so on. R&D expenses are current-period operating expenditures that directly reduce current-period profit, do not create a subsequent depreciation burden, and this marginal cost can be shifted to end consumers through supply chain management and tiered product pricing.

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Zhang Yirui further pointed out: "As the gatekeeper of hardware and systems, on-device AI directly raises the threshold for device upgrades and hardware ASP, while firmly locking in a super entrance for billions of high-net-worth users. No matter which external large model wins, accessing the Apple ecosystem requires accepting its platform revenue sharing and rules, so the commercial loop is relatively stable."

Apple's financial reports show that in fiscal year 2026, Apple's R&D expenses were $45.765 billion, up about 32% year over year; capital expenditures were only $9.041 billion, down about 29% year over year. Chief Financial Officer Parekh said at the earnings call that the company would "significantly increase overall AI investment," with investment mainly concentrated in R&D. The more than fivefold magnitude gap between R&D expenses and capital expenditures also means that Apple's AI catch-up is far "lighter" on the balance sheet than that of other giants.

But "light" does not mean "cost-free." R&D expenses are real current-period expenditures, and every dollar Apple spends catching up in AI capability will directly hit operating margin, rather than being spread over many future years like depreciation. At the same time, rising memory prices are squeezing gross margin from another side. Ternus called memory prices "unprecedented," and Apple has already successively raised prices for Mac, iPad, and iPhone to hedge.

Apple's relative gains are built on a balance between restrained capital expenditures and monetization of its existing ecosystem, but this does not mean it is absolutely safe. As soaring R&D expenses directly erode current-period profit and memory price increases compress hardware gross margin, the cost for Apple to maintain a high valuation is rising. Whether Apple can maintain profitability while increasing AI investment will remain a focus of the Science and Technology Innovation Board Daily.

Cailianshe statement: The article content is for reference only and does not constitute investment advice. Investors who act on it do so at their own risk.

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Apple rises about 29% this year, becoming the most resilient of the Magnificent Seven; Ternus demands stepped-up AI investment

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