The “Magnificent 7” tech giants – Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta, and Tesla – have led the stock market’s charge, largely fueled by excitement around artificial intelligence. In 2023, this elite group saw spectacular gains (collectively surging about 75% that year, versus ~24% for the broader S&P 500). Their sheer size meant they contributed over half of the S&P 500’s total gains in 2023. Investors piled into these big tech names on hopes that AI innovations would turbocharge growth.
Yet Apple, despite being part of this group, did not skyrocket to the same degree as some peers. In fact, by mid-2025 Apple’s stock performance was the weakest of the Magnificent 7. One analysis noted Apple was the worst-performing among the seven in 2025, with shares down about 20% year-to-date as of June. This relative lag comes even as other tech leaders like Nvidia or Meta notched hefty gains on AI hype. Simply put, Apple’s stock has underperformed many of its big-tech brethren during the recent AI-driven rally.
This is an interesting contrast: Apple – the world’s largest company – has been trailing its peers in stock performance, even while the tech sector booms. Some of that is due to Wall Street’s view that Apple is behind in the “AI race.” Unlike Microsoft (with Open AI integrations) or Google (with its AI search and cloud initiatives), Apple hasn’t made splashy AI product launches. Critics point out that Siri’s development has lagged and that Apple hasn’t unveiled cutting-edge AI models like others. At Apple’s June 2025 Worldwide Developers Conference (WWDC), investors were left wanting more detail on Apple’s AI plans. In short, Apple has been seen as an AI laggard among mega-caps – which has put its stock in the “penalty box” in the short term.
However, focusing only on short-term market fads can obscure the bigger picture. Despite its stock lagging in the recent AI frenzy, Apple’s business has been performing exceptionally well. The company’s financial results over the past year have been strong – arguably stronger than the stock’s performance would suggest. Let’s delve into Apple’s growth and why long-term investors (including famed investor Warren Buffett) remain confident in this tech giant.
Even as some investors fret that Apple isn’t waving an AI magic wand, the company has quietly been delivering solid growth and beating earnings expectations. Over the past 12 months, Apple has posted better-than-expected results, underscoring the strength of its core business. For example, in its fiscal third quarter of 2025 Apple reported record June-quarter revenue of $94.0 billion, up about 10% year-over-year, handily topping analysts’ consensus of roughly $89.3 billion. This was Apple’s largest revenue beat (in dollar terms) since 2021, even though the June quarter is typically Apple’s slowest. Earnings were a bright spot as well – Apple’s quarterly profit came in at $1.57 per share, beating Wall Street’s $1.43 forecast. In particular, iPhone sales – Apple’s main revenue engine – jumped 13% year-on-year to $44.6 billion, smashing estimates (analysts expected about $40 billion). The company also saw strength in other areas: its Services division reached an all-time high of $27.4 billion in revenue for the quarter, driven by App Store sales and subscriptions. This kind of double-digit growth and across-the-board earnings beat sent Apple’s stock popping higher after the report, even as broader skepticism about Apple’s AI strategy lingered.
It’s clear that Apple’s underlying business remains robust, regardless of whether it’s the flashiest AI innovator of the moment. In China – a crucial and competitive market – Apple managed to grow revenue 4% year-over-year in that quarter. The company’s ability to keep expanding in mature product categories (like iPhones) and to excel in high-margin areas (like Services) shows the enduring strength of the Apple brand. One analyst noted that investors should “not underestimate” the feat that Apple delivered such a “massive revenue beat” and its biggest dollar growth in years, especially in a typically slow quarter. In other words, Apple is still posting “amazing growth” by conventional standards, even if its achievements have been somewhat overshadowed by AI-mania elsewhere in tech.
Meanwhile, Apple is hardly ignoring AI – it’s just taking a more measured, behind-the-scenes approach. CEO Tim Cook has been candid that Apple is “significantly growing” its investment in AI and is “very open to M&A” (acquisitions) to bolster its capabilities. The company is reportedly working on a more personalized Siri and other AI-driven features to roll out in the near future. Apple even sparked buzz with reports it was exploring an acquisition of an AI startup (Perplexity AI) to jump-start its AI strategy. While nothing materialized from that rumor, it signaled to Wall Street that Apple may augment its AI prowess through strategic deals – a “buy vs. build” approach that could quickly plug gaps. As one tech analyst put it, if Apple can’t make its own special AI sauce immediately, it might just buy the ingredients. Importantly, Apple has a massive war chest of cash, which gives it flexibility to invest heavily in R&D or acquisitions in emerging areas like AI.
For now, Apple seems content to integrate AI within its products quietly, focusing on enhancing user experience (think on-device machine learning for photography, Siri improvements, etc.) rather than shouting from the rooftops about “AI” in its marketing. This cautious strategy has drawn some criticism, but it aligns with Apple’s general ethos: perfect the product and ecosystem, rather than chase hype. Analysts at eMarketer noted that while the “AI arms race” is pressuring tech firms toward bold moves, Apple’s disciplined focus on product quality over rushing to market could be an advantage in the long run – provided the company continues ramping up AI R&D to stay competitive. In short, Apple may be late to the AI party in the eyes of traders, but it’s not absent – and its methodical approach could pay dividends down the road.
From a long-term investment perspective, Apple’s recent stock price lull might actually spell opportunity for patient investors. History has shown that buying and holding Apple stock over time has been an incredibly rewarding strategy. The company has a track record of innovation, steady growth, and shareholder-friendly policies that few companies can match. For retail investors looking for stable wealth-building, Apple exemplifies the power of long-term compounding.
Consider Apple’s performance over a longer horizon: over the past 10 years, Apple’s total return (including price appreciation and dividends) is about 692%. To put that in perspective, a $10,000 investment in Apple a decade ago (mid-2015) would be worth roughly $79,200 today. If you stretch the timeline further, Apple’s 15-year total return is an astounding ~2,473% – truly wealth-defining gains for early believers. Even more recently, despite some ups and downs, Apple stock has appreciated significantly. (One noted analysis highlighted that Apple’s share price has climbed about 749% in the last nine years, reflecting the enormous value created under CEO Tim Cook’s tenure.) The exact figures may vary depending on the date and whether dividends are included, but the clear trend is that Apple’s long-term trajectory has been sharply upward. Long-term shareholders – including many everyday retail investors who simply held on through market cycles – have seen Apple transform from a $500 billion company to a $3 trillion titan, and their portfolios have grown in step.
Why has Apple been such a reliable generator of returns? A big reason is its exceptional ability to retain customers and generate repeat revenue – a “wide moat” business in investor parlance. Apple’s products have fostered an ecosystem and brand loyalty that keeps users coming back. For instance, since the introduction of the 5G iPhone in late 2020, Apple has consistently held over 50% of the U.S. smartphone market share, meaning at least half of American smartphone buyers choose an iPhone. Once consumers enter Apple’s ecosystem (buying iPhones, iPads, Macs, Apple Watches, etc.), they often remain deeply engaged through services (like iCloud, Apple Music, App Store apps, and subscriptions). This creates a virtuous cycle of revenue: hardware sales feed into services revenue, which carries high profit margins and further locks in user loyalty. In the most recent quarter, Apple’s services alone hit a record $27+ billion in revenue – a testament to the successful pivot to recurring revenue streams. Such durable, high-margin income from services gives Apple resilience even when device sales fluctuate, and it provides a base of steady growth that investors can count on.
Another critical factor is Apple’s shareholder-friendly capital return program. The company has been extremely generous in returning cash to shareholders via stock buybacks (repurchases) and dividends. In fact, Apple runs the world’s largest share repurchase program. Since initiating buybacks in 2013, Apple has repurchased approximately $775 billion worth of its own stock – yes, three-quarters of a trillion dollars – and in the process has reduced its total outstanding shares by over 43%. This is a powerful long-term driver of shareholder value: by shrinking the share count, Apple boosts each remaining share’s ownership stake in the company’s profits and assets. Long-term holders effectively see their slice of Apple’s earnings grow over time thanks to these buybacks, even if they don’t buy additional shares. It’s no wonder Warren Buffett has called buybacks a simple way to increase his ownership in wonderful companies “for free.” Apple’s buybacks, combined with a modest but consistent dividend, have meant huge capital return to those who hold the stock. For a retail investor, this strategy of buy-and-hold aligns perfectly with Apple’s approach: as Apple earns and grows, it keeps rewarding you, the shareholder, by making your stake more valuable over the years.
It’s hard to talk about Apple as a long-term investment without mentioning Warren Buffett. The legendary investor behind Berkshire Hathaway has famously made Apple his single largest stock holding – a strong vote of confidence in Apple’s long-term prospects. Buffett’s firm Berkshire Hathaway currently owns about $64 billion worth of Apple stock (roughly 915 million shares), making up close to 22% of Berkshire’s entire $294 billion equity portfolio. In other words, more than one out of every five dollars Buffett has in the stock market is invested in Apple. This stake is so large that Apple now represents a significant portion of Buffett’s wealth, and by extension, Berkshire’s fortunes rise and fall to a notable degree with Apple’s performance. The “Oracle of Omaha” is known for his cautious, value-driven investing style, so his aggressive bet on Apple speaks volumes.
Buffett wasn’t drawn to Apple because it’s an AI high-flyer or a trendy trade. In fact, he has stated he doesn’t invest in Apple for any speculative tech fervor. Instead, Buffett values Apple for its fundamentals: an enduring competitive moat, a sticky customer base, and excellent management that returns profits to shareholders. As one analysis put it, Buffett and his team prize traits like “sustainable moats, loyal customers, and phenomenal capital-return programs” far more than chasing the latest tech revolution. Apple fits that mold perfectly. The company’s brand loyalty and ecosystem give it a durable moat (customers keep buying iPhones and subscribing to services not just out of habit, but because competing alternatives offer a less integrated experience). And as discussed, Apple’s capital return via buybacks is practically unmatched, which is very attractive to a long-term oriented investor like Buffett.
In Buffett’s own portfolio, Apple has been a star performer. Since Berkshire started buying Apple in 2016, the stock’s value has multiplied several-fold, greatly outperforming the broader market. No surprise, then, that Buffett has famously said he “will never sell all his Apple shares” and that Apple is not just a stock but a stake in a wonderful business that he plans to hold indefinitely (Buffett has quipped that he sees Apple more as a consumer products company than a tech company – one with an extraordinarily devoted customer base). This philosophy echoes a key point for retail investors: if you’ve identified a fundamentally strong company like Apple, with enduring advantages and shareholder-friendly policies, the best approach is often to buy it, hold it, and let compounding work its magic. Or, as CNBC’s Jim Cramer often simplifies this approach: “Own it, don’t trade it.”
For everyday investors, Apple represents a kind of cornerstone holding that can anchor a portfolio. Of course, no stock is immune to volatility – Apple’s share price will have its ups and downs (as seen in the past year where it underperformed flashy AI stocks). But the key is Apple’s resilience and consistent growth over time. The company’s massive scale (over $90 billion in quarterly revenue), global reach, and diversified product lineup mean it’s not reliant on any single tech trend. Even if smartphone sales saturate, Apple finds growth in wearables or services; even if device upgrade cycles lengthen, Apple can rely on its installed base of over 2 billion active devices to generate recurring revenue. This stability is precisely what long-term investors look for. It allows you to hold through short-term market noise (like fears that “Apple is falling behind in AI this quarter”) with confidence that the business remains fundamentally strong.
Moreover, Apple’s financial strength – such as huge free cash flow and a fortress balance sheet – gives it flexibility to adapt and invest as needed. If AI truly is the next frontier, Apple has the resources (tens of billions in cash on hand) to catch up or acquire capabilities. In the past, Apple was also seen as late to certain tech trends (remember how it wasn’t first in music players, smartphones, or smartwatches), but it eventually came to dominate those categories through superior execution. Retail investors can take comfort in Apple’s proven ability to innovate at its own pace and play the long game in new tech arenas.
Additionally, Apple’s conservative approach to financial management (e.g. not overextending itself, maintaining healthy profit margins around 25%+) suggests it’s built to weather economic downturns. For someone saving for retirement or the long haul, having a stock like Apple that can endure recessions and still emerge stronger can be very reassuring. Apple’s presence in consumer’s daily lives – from the phone in your pocket to the services you use – also means its business model is relatively understandable, which is a plus for retail investors who may shy away from companies they don’t really get. In essence, Apple combines the growth potential of tech with the stability of a blue-chip consumer company, an appealing mix for long-term holdings.
Finally, it’s worth noting that Apple’s current period of relative stock stagnation (compared to AI high-flyers) has made its valuation more reasonable than some peers. While many AI-centric stocks have seen their price-to-earnings (P/E) ratios shoot up, Apple’s P/E remains in a moderate range around the low 30s – still above the market average, but backed by very dependable earnings. If Apple’s AI investments start bearing fruit or if market sentiment rotates back toward quality and away from pure AI speculation, Apple’s stock could see renewed outperformance. But even without banking on multiple expansion, simply holding Apple and letting its earnings, buybacks, and dividends compound is a strategy that has historically beaten the market. The past decade’s ~22% average annual return for Apple (versus ~12-13% for the S&P 500) shows what patience can achieve.
Apple may not be the poster child of the current AI boom, and its stock hasn’t been the hottest in the Magnificent 7 recently. But don’t mistake short-term market fashions for long-term weakness. Apple Inc. remains a fundamentally strong juggernaut: it continues to grow revenues, beat earnings expectations, and expand its ecosystem of loyal users. The company’s deliberate approach to emerging tech like AI – while earning it a “laggard” label in some headlines – stems from the same focus on product excellence that made Apple hugely successful in the first place. For investors with a long horizon, Apple’s slight underperformance amid the AI craze could be seen as an entry point rather than a red flag.
The core rationale for owning Apple stock is intact: a dominant brand with pricing power, a sticky customer base (that keeps buying iPhones and subscribing to services), and a management team dedicated to rewarding shareholders. “Buying and holding” Apple has proven to be an amazing strategy over the long term, turning early investments into sizable fortunes through the power of compounding. The presence of a heavyweight like Warren Buffett – who has placed enormous trust (and capital) in Apple – further underlines the conviction that Apple is more of a forever company than a trade. As Buffett’s approach would indicate, the smart move with Apple is to be an owner, not a speculator.
In summary, while Apple might be lagging some flashier tech names in the short run, it continues to fire on all cylinders where it counts: in its financial performance and its ability to enrich shareholders. Retail investors can take a cue from this and from Buffett’s example. By staying objective and focusing on concrete numbers – revenue growth, earnings beats, service sales, buybacks – one sees that Apple is far from slowing down as a business. And as history shows, the stock eventually follows the business. Investing in Apple with a long-term, buy-and-hold mindset has been a winning formula in the past, and with the company’s unwavering strengths, there’s good reason to believe it will remain a winning formula in the future. Apple’s story suggests that patience and conviction in a great company can be richly rewarded – even if the market’s flavor of the month lies elsewhere.
