Apple's AI Momentum Is Building -- Here's What It Means for Investors

Key Points

• Apple's revenue in its latest quarter was its highest-ever in one of its June quarters.

• The $3.5 billion Apple spent on capital expenditures was the most since its fiscal quarter that ended in January 2023.

• Apple's stock is now trading closer to its five-year average after falling this year.

• 10 stocks we like better than Apple ›

Apple (NASDAQ: AAPL) has long been one of the premier stocks on the U.S. stock market, spending most of the past decade as the world's most valuable public company. However, the company has seemingly taken a step back in the past few years as the artificial intelligence (AI) boom has boosted the value of many other big tech companies.

In the past three years, Apple's stock is only up around 30%, making it the second-worst performer of the "Magnificent Seven" stocks (trailing only Tesla) and underperforming the S&P 500. That's not something investors are used to seeing from Apple.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Despite Apple seemingly lagging behind, there could possibly be a breath of fresh air coming to the company, sparking new life into the stock.

A much-needed rebound for the iPhone and Mac products

Apple's fiscal third-quarter earnings, for the period ended June 28, were a pleasant surprise for many people. Its revenue grew nearly 10% year over year to $94 billion, which is a June quarter record for the iPhone maker. And speaking of iPhone, the smartphone's revenue grew 13% year over year to $44.6 billion, which Apple noted was driven by the popularity of the iPhone 16 family.

Mac (which includes products like MacBook Pro, MacBook Air, iMac, and Mac Studio) revenue grew 15% year over year to $8 billion, but iPad and wearables, home, and accessories sales were noticeably down -- 8% and 9% year over year, respectively.

Still, Apple's hardware revenue grew by 8% year over year and accounted for nearly 71% of its total revenue for the quarter. Apple's services segment reached an all-time high, bringing in $27.4 billion, but hardware remains -- and will likely remain -- king for the company.

AAPL Revenue (Quarterly) data by YCharts

Apple's year-over-year revenue growth was its highest in the past three years.

Is Apple finally getting serious about AI?

The big cloud hanging over Apple's business has been AI (what it calls "Apple Intelligence"), and the lack of urgency in the space compared to rivals like Alphabet and Microsoft. It seems Apple is beginning to take it more seriously and address this issue.

A major advantage on Apple's side is the number of devices it has in people's pockets, homes, and offices. Ideally, Apple can integrate AI into its various hardware, giving people even more of a reason to choose it over competitors. This has been the plan for a while, but it hasn't gone as smoothly or as quickly as most people thought or hoped.

That should change soon, with Apple's management noting on its latest earnings call that Apple is "increasing [its] investment significantly in AI," both in infrastructure and company personnel. In its latest quarter, Apple spent nearly $3.5 billion on capital expenditures, its most since its fiscal quarter that ended in January 2023.

AAPL Capital Expenditures (Quarterly) data by YCharts

Apple has always moved cautiously and with intention. These new AI investment developments don't strike me as the company just now coming to its senses, but more so Apple feeling like now is the right time (a lagging stock price sure helps it come to that realization).

Image source: Getty Images.

Apple's stock looks like a good entry point for investors

At the time of this writing, Apple is trading at 29 times its projected earnings for the next year. That's the second-lowest out of the "Magnificent Seven" stocks and below the 35 it was at to start this year.

AAPL PE Ratio (Forward) data by YCharts

That alone doesn't make Apple a buy right now, but it does give it a lot more upside now than before. This is especially true if its new AI prioritization plays out as management envisions. With $133 billion in cash and marketable securities to its name, Apple has all the resources it needs to ensure it keeps pace in the AI race.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 4, 2025

Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.