Bernstein: Apple has become a safe-haven asset for investors avoiding AI stocks

According to investment firm Bernstein's assessment, Apple has become a kind of safe haven for investors amid rising risks in the artificial intelligence sector. The company has maintained its "Outperform" rating on Apple shares and its $380 price target unchanged.

According to analyst Mark Newman, one of Apple's key advantages is its relatively low capital expenditure related to artificial intelligence. The company spends only 2% of its revenue on capital investments and collaborates with Google on AI model development. Additionally, many AI features run directly on devices and don't require expensive data centers.

As a result, Apple is less dependent on the pace of data center construction and the scale of AI infrastructure investment. This sets it apart from other tech giants that are making significant capital expenditures for AI development and facing challenges from declining free cash flow.

According to Newman, even in the event of a potential AI bubble bursting, Apple could benefit, including through the opportunity to acquire companies whose market value drops sharply.

Record Valuation and Customer Loyalty

These advantages have pushed Apple's market valuation to a historic high. The company's shares are trading at roughly 37 times expected 2027 earnings. Among large American companies with expected profit growth below 15%, only Apple, Costco, Walmart, and GE have a forward P/E ratio above 30.

In Bernstein's view, Apple currently belongs more to the category of high-quality consumer companies than to the traditional tech sector. Despite the 37x valuation, analysts say the company trades cheaper than Costco and Walmart, while having higher revenue growth, better cash flow generation capability, and stronger shareholder capital return metrics.

The analyst also emphasizes Apple's customer loyalty: approximately 90% of iPhone users continue to upgrade their device within a four-year cycle. Bernstein compares this figure to Costco's annual membership renewal rate, which is also around 90%.

"Is Apple's valuation excessive? Given customer loyalty, earnings sustainability, growth, free cash flow, and shareholder returns, we don't think so," Newman writes.

According to Bernstein's Reverse Discounted Cash Flow (Reverse DCF) model, Apple's long-term growth rate is approximately 4%, which the company considers a reasonable assumption.