Apple Hits $5tn by Refusing to Play the AI Spending Race
Apple briefly touched a $5 trillion valuation on Tuesday, becoming only the second company in history to do so. It achieved this milestone by opting out of the AI spending frenzy that has seen its rivals drain their resources. However, the same restraint that has made it a winner is now a challenge as it prepares to hand over leadership to a new CEO.
July 29, 2026 – 4:02 pm
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Apple became the second most valuable company in the world, surpassing Nvidia a day earlier.
Why Apple’s Strategy Works
For two years, investors penalized Apple for missing the AI boom. Despite this, its current strategy of relying on Google’s technology and keeping spending low has paid off. In 2026, Apple stock has outperformed the Magnificent Seven, with a 25% increase, while other tech giants like Tesla, Microsoft, and Meta have seen their stocks decline.
This rally is not solely due to Apple’s actions but rather a shift in investor sentiment away from AI and towards consumer-focused companies that are not burning cash.
The AI Spending Race and Its Aftermath
While Alphabet, Amazon, Meta, and Microsoft invest heavily in data centers, spending hundreds of billions each, Apple spends approximately $11 billion this year—a fraction of their expenditures.
The recent shift in investor sentiment is attributed to the mounting bills elsewhere. Google raised its capital-spending guidance to up to $205 billion and reported its first-ever negative free cash flow, burning $5.9 billion in a single quarter. This has sparked nervousness about the circular financing that supports AI development, with companies often funding each other’s compute needs.
The resulting rout has seen the Nasdaq 100 fall over 10% from its June high, with chip stocks taking the brunt of the hit. The main semiconductor ETF is down 14% in a month, and a popular memory fund has lost 29%. In Asia, SK Hynix and Samsung each dropped more than 10%.
The Catch
While Apple’s cost-effective strategy has kept it profitable, it also lags behind in AI development. Its redesigned Siri is still in beta, with a full launch planned for the fall alongside new iPhones. Moreover, its partnership with OpenAI has collapsed, and Apple sued the company this month, alleging trade secret theft.