We just covered the 10 Best Stocks to Buy Now According to Warren Buffett. Apple Inc. (NASDAQ:AAPL) ranks #1 (see the 5 best stocks to buy now here).
Apple Inc. (NASDAQ:AAPL) remains the biggest holding of Berkshire despite the fund decreasing its stake in the iPhone maker over the past few quarters.
Wall Street was extremely skeptical of Apple Inc. (NASDAQ:AAPL)’s AI strategy until concerns over increasing data center spending and ROI started popping holes in the AI hype, making the Cupertino giant’s approach look increasingly prudent. Apple Inc. (NASDAQ:AAPL) spent just about $12.7 billion in CapEx last year, while major tech companies like Microsoft, Google, Meta and Amazon are expected to spend about $600 billion combined on AI infrastructure in 2026.
What about the concerns about declining iPhone sales? Earlier this year, Apple Inc. (NASDAQ:AAPL) issued a higher-than-expected revenue growth guidance for the March quarter driven by a rebound in iPhone demand. But let’s face it: Analysts are now coming to terms with the reality that iPhone sales are unlikely to keep delivering strong growth as users may not upgrade as frequently.
Apple Inc. (NASDAQ:AAPL) anticipated this shift and began diversifying into services and other higher-margin business segments. As of the fiscal Q1, Apple’s Services revenue reached an all-time record of $30 billion, accounting for about 21% of total revenue. Services gross margins are about 76%, nearly double the 40.7% margin seen on physical products. With an installed base of 2.5 billion devices, Apple Inc. (NASDAQ:AAPL) is positioned well to keep making money despite a potential plateau in iPhone sales.
YCG Investments in its fourth quarter 2025 investor letter explained why it bought Apple shares during extreme volatility. Read it here.
While we acknowledge the potential of AAPL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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