Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / Why Apple Is Beating the AI Selloff in June 2026
Transcript
- Lucas: So the NASDAQ just had its worst week since 2022, down over five percent in five days. Microsoft lost nearly ten percent. Nvidia dropped eight and a half. Amazon down almost six. But Apple? Apple is up a fraction of a percent on the week. Luna: That is a striking divergence. What's Apple doing that the others aren't? Lucas: The short answer is that Apple is not really an AI capex story right now. The market is punishing companies that are spending billions on data centers and GPUs without clear near-term revenue. Apple's capital spending is modest by comparison, and its return on invested capital is still over 40 percent. Luna: So the selloff is hitting the spenders, not the cash generators. Lucas: Exactly. And Apple is generating enormous cash. It announced a 90-billion-dollar share buyback authorization back in May, and it's been increasing its dividend by about four percent annually. That's a very different signal to the market than 'we need to spend 30 billion this year on AI infrastructure'. Luna: Meanwhile, Microsoft is projecting a massive capex ramp, and investors are getting nervous about the payoff timeline. Lucas: Right. And Apple's Services revenue — App Store, Apple Music, iCloud, Apple Pay, licensing deals — that business is now over 25 billion a quarter, growing in the high single digits. It's recurring, high margin, and it doesn't require a new chip every year. Luna: It's almost like Apple is being valued as a consumer staples company with a tech growth kicker. Lucas: That's one way to see it. Its price to earnings ratio is around 30, which is not cheap, but it's not the 40-plus multiples we see on some of the AI names. And it's got a fortress balance sheet — over 150 billion in net cash. Luna: So in a week where the market is rotating out of high-growth AI and into safer harbors, Apple becomes a kind of safe haven within tech. Lucas: Exactly. Now, let's layer on the macro picture. The jobs report on Friday was hot — 272,000 new nonfarm payrolls, well above consensus. That pushed the ten-year Treasury yield back above 4.4 percent, and the market is now pricing in maybe one rate cut this year, if that. Luna: Higher for longer is back on the menu. Lucas: Right. And that environment tends to favor companies with pricing power and strong free cash flow — which Apple has in spades. Meanwhile, the banks are also benefiting. JPMorgan is up over five percent this week. Bank of America up five percent. Luna: Berkshire Hathaway has to be loving that. They've been buying Bank of America and adding to their financials position all year. Lucas: Berkshire is up almost four percent this week alone. And it's a reminder that when the market sells off growth, value-oriented names with strong moats and big cash piles tend to hold up. The Russell 2000 was down two and a half percent, but the value ETF, VTV, was actually up slightly. Luna: So the rotation is real. But is it a rotation or just a temporary flight to safety? Lucas: That's the billion-dollar question. If the AI capex cycle delivers on its promises — say, Microsoft's AI revenue starts to show up in a meaningful way next year — then these growth stocks could bounce hard. But if the payoff is delayed, the selling could continue. Luna: And Apple? If they don't have a big AI story, they could get left behind when the cycle turns. Lucas: That's the risk. Apple is working on its own AI features, but it's being very deliberate. They're not going to announce a massive capex plan until they see clear consumer demand. That cautious approach is helping them now, but it could hurt them if the competition pulls ahead. Luna: So we're really talking about two different investment theses here: Apple as a cash-flow compounder versus the hyperscalers as high-risk, high-reward AI plays. Lucas: Exactly. And the market is rewarding the compounder this week. One thing I always look at is free cash flow yield. Apple has a free cash flow yield of about 3.8 percent — not huge, but stable. Microsoft's free cash flow yield is closer to 2 percent, and they're spending a lot more of that cash on capex. Luna: So investors are saying, 'Show me the cash, not the promises.' Lucas: Right. And if you're a value-oriented investor, that's music to your ears. But if you're a growth investor, you have to ask: is this a buying opportunity in Microsoft and Nvidia, or is the selloff just beginning? Luna: And that's the kind of question that keeps stock pickers up at night. Lucas: It really is. One thing that helps me think about it is looking at what Buffett is doing. He's buying financials, he's buying back Berkshire stock, he's sitting on a mountain of cash. He's not chasing AI hype. Luna: So the Oracle of Omaha is signaling caution on tech and confidence in the old economy. Lucas: Exactly. And that might be the most important data point of the week. Not every investor needs to follow Buffett, but understanding his moves can help frame your own decisions. Luna: Yeah, I think that's a really useful lens. And speaking of useful — if today's breakdown helped you think about a money decision differently, I just want to mention that the way we keep this show ad-free and independent is through listener support. Lucas: It's true. We don't run any sponsor ads, no affiliate links, nothing like that. So if you've gotten value out of the show, you can support it at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. Luna: And it really helps us keep doing what we do. Okay, back to the market — Lucas, where do you see the next catalyst for Apple? Lucas: I think the next big catalyst is the September iPhone launch. If Apple can show that its AI features — things like on-device language models and improved Siri — drive a supercycle, then the narrative flips. But if it's a tepid upgrade cycle, the stock could drift. Luna: So the story is still being written, and the data will tell us in a few months. Lucas: Exactly. And that's what makes stock picking interesting. You don't need to have all the answers today. You just need a framework for watching the right signals.