PONY

Apple (NASDAQ:AAPL) stock has diverged from its Magnificent 7 peers as investors view it as a safer bet while artificial intelligence (AI) concerns persist. It ended last week at $344, just below its all-time high of $350 and about 41% above its lowest level this year.

In contrast, the Roundhill Magnificent Seven ETF (CBOE: MAGS) has dropped in the last three consecutive weeks. It has fallen by over 8.25% from its peak this year. Top companies like Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOG), and Amazon (NASDAQ:AMZN) have slipped. 

Apple to Publish Earnings on Monday

Apple has done well this year and has overtaken Nvidia to become the biggest company in the world with a market capitalization of over $5.02 trillion.

Apple has drawn attention because of its limited exposure to the AI industry. Unlike other hyperscalers, it is not spending billions of dollars on AI infrastructure. Instead, the company has focused on its core products while dedicating some resources to improving Apple Intelligence.

Apple’s capital expenditure has been relatively small this year. It spent just $2.0 billion in the first quarter and $2.5 billion in the second quarter. In contrast, top hyperscalers are spending over $700 billion this year and are making negative free cash flow. As a result, the company’s free cash flow in the first half of the year stood at over $57 billion. 

Apple will publish its earnings report on Monday, and analysts expect that its business did well in the September quarter. Benzinga data shows that analysts see the revenue coming in at $113.27 billion, up by 10.5% from a year earlier.

Apple has made some major announcements ahead of its earnings. It launched its Apple Duo phone, which has already sold out. It also launched the iPhone 18, with early metrics by Counterpoint Research showing that sales were higher than the previous models.  

Apple also launched its new MacBooks, which feature a touchscreen, with sales expected to do well over time. 

These events explain why analysts are bullish on the company. JPMorgan’s Samik Chatterjee hiked his target from $340 to $360, while Bernstein and Evercore maintained their outperform ratings. 

Options Market Points to an Apple Stock Jump

The options market suggests that Apple shares may jump after the earnings. The company has an implied volatility of 52.3%, much higher than its historical volatility of 16.1%.

It has a put/call ratio of less than 1, a sign that it has more calls than puts. Most of the calls are concentrated at $355, up modestly from the current $344. On the other hand, most of the puts are concentrated at $330, suggesting a 4% drop from the current level.

Technically, the stock has formed an ascending channel since July this year. It has also remained above the 50-day Exponential Moving Average (EMA). Its lowest point in October coincided with the 50-day EMA. It has also remained above the Supertrend indicator.

The stock may resume the upward trend, potentially to the key resistance at $355. A drop below last Friday’s low of $334 will invalidate the bullish outlook.

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