In the midst of the market's intense fluctuations triggered by the wave of artificial intelligence, Apple is becoming a safe haven for investors. The tech giant's correlation with the Nasdaq 100 index has dropped to its lowest level in nearly 20 years, providing a rare alternative for funds seeking to avoid AI uncertainties.
According to Bloomberg's compiled data, the 40-day correlation between Apple and the Nasdaq 100 index fell to 0.21 last week, marking a new low since 2006. This correlation has been declining since its peak of 0.92 in May of last year, primarily due to Apple's choice not to participate in the AI arms race, making it an &#34;outlier&#34; among tech stocks. A correlation of 1 indicates that both move in sync, while -1 indicates a complete inverse relationship.
This decoupling phenomenon is occurring as the market falls into an &#34;AI doom loop.&#34; For over a month, investors have been oscillating between two concerns: fearing that hundreds of billions of dollars in AI investments may not yield returns, and worrying about the same technology disrupting industries from software to wealth management and logistics.
Apple happens to fit none of the above anxiety scenarios. The iPhone manufacturer has neither participated in the capital expenditure frenzy nor is it seen as a major business line facing threats from tools like Claude under Anthropic PBC. In February, Apple rose 1.7%, while the Nasdaq fell 3.2%, and the Magnificent Seven index plummeted 7.2%, heading towards its worst monthly performance since March.
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<h2>Unique Positioning Amid AI Volatility</h2>
Apple's unique position has earned it favor in the market. &#34;Apple's lack of correlation is absolutely a positive in the current environment,&#34; said Art Hogan, chief market strategist at B. Riley Wealth, which manages $25 billion in assets. &#34;We are in an environment of AI whack-a-mole, where investors are extremely anxious about the next target to be disrupted, to the point of shooting first and asking questions later.&#34;
Unlike most of its tech peers, Apple has not engaged in large-scale AI infrastructure development. While the company faces challenges in integrating AI into its products, it is accelerating the development of three AI-driven hardware devices. Last month's earnings report also highlighted positive trends: the company achieved record quarterly sales, the core iPhone product line performed strongly, and it provided a better-than-expected outlook for the current quarter.
&#34;The risks of hardware are far lower than those of software,&#34; said Wayne Kaufman, chief market analyst at Phoenix Financial Services. &#34;In any case, people cannot use AI to create a new iPhone for themselves.&#34;
<h2>Market Performance of the Decoupling Trend</h2>
The divergence between Apple and tech stocks is vividly displayed. On Tuesday, Apple rose 3.2%, easily outperforming the Nasdaq 100 index's decline of 0.1%. This marks the third time this month that Apple has outperformed the index by at least 3 percentage points, including the best single-day performance in over a year on February 4
This performance stands in stark contrast to the major tech stocks. The Magnificent Seven Index is heading towards its worst monthly performance since March, while Apple is rising against the trend. &#34;It may have limited upside during a tech stock rebound, but I don't think it will be sold off because it ranks high on the list of companies that seem to be insulated from AI impacts,&#34; Hogan said.
<h2>Challenges and Valuation Concerns</h2>
Despite its defensive attributes, Apple still faces numerous challenges. The stock plummeted 8% last week, marking its largest drop since April. The 5% decline last Thursday was the most severe since the sell-off triggered by April tariffs, following a Bloomberg News report the previous day that the company's long-planned upgrade of the Siri virtual assistant might be delayed.
The surge in memory chip prices has also become an increasing headwind, especially against the backdrop of Apple's growth lagging behind other tech stocks. Analysts expect its revenue growth for the fiscal year ending in September to be 11%, but it is projected to slow to 6.7% in fiscal year 2027. According to estimates compiled by Bloomberg, profit growth is also expected to slow next year.
The relatively modest profit growth outlook puts the stock's price-to-earnings ratio at about 30 times estimated earnings for the next year, higher than all Mag7 peers except Tesla, and well above the Nasdaq 100's level of 24 times. &#34;Apple is not cheap, and it hasn't been for a while, and it hasn't really grown compared to other tech stocks,&#34; Kaufman said, &#34;but I think the market will continue to give it a vote of confidence.&#34;
<h2>The Investment Logic of &#34;Hardware Defense&#34;</h2>
The market's favor for Apple reflects a preference for hardware businesses in an era of AI uncertainty. The company is set to hold a product launch event in a few weeks, and investors are betting that its hardware ecosystem can provide relatively stable return expectations.
The core of this &#34;hardware defense&#34; logic is that Apple's revenue base is built on physical product sales, which are not easily replaced by AI tools. In contrast, software and service companies face direct threats of disruption from generative AI, while companies heavily investing in AI infrastructure bear the risk of uncertain returns.
In a market seeking certainty, Apple offers a rare option—neither betting on an AI boom nor facing direct risks of being disrupted by AI. This middle ground is the fundamental reason for its significantly reduced correlation, granting it unique defensive value amid the turbulence in tech stocks

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In the wave of AI, Apple has become a "safe haven" amid the turbulence of tech stocks, as its correlation with the Nasdaq has reached a 20-year low due to its lack of deep involvement in the arms race. Amid doubts about AI investment returns and anxieties over disruptions in the software industry, Apple has managed to break through against the trend with its resilient hardware ecosystem. Despite pressures from high valuations and slowing growth, its unique "AI neutral" positioning gives it a rare defensive value

- In the midst of market volatility due to AI advancements, Apple is emerging as a refuge for investors, with its correlation to the Nasdaq 100 hitting a near 20-year low.  
- Apple has chosen not to engage in the AI arms race, which has led to its distinct position among tech stocks, resulting in a 1.7% increase in February while broader tech indices experienced declines.  
- This disconnection reflects a preference for hardware businesses amid AI uncertainty, and Apple's reliance on physical products minimizes direct threats from AI disruptions.

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"Hardware Defense" hedges AI anxiety, and the correlation between Apple and the Nasdaq hits a 20-year low