Apple becomes a 'safe haven' in the AI sell-off, Bernstein says a 37x P/E ratio is still not expensive

November 12 - Bernstein released a research report pointing out that Apple, due to its low capital expenditure and relatively small reliance on AI servers, is viewed by the market as a "safe haven" tech stock amid the recent sell-off in AI concept stocks. Although its expected P/E ratio for fiscal year 2027 has risen to 37x, a record high, and its valuation multiple relative to the S&P 500 has reached 2x, also at a historical high, Bernstein maintains its "outperform" rating on Apple with a target price of $380.

Bernstein believes that Apple's capital expenditure accounts for only about 2% of revenue, and through cooperation with Google on developing foundation models and promoting on-device AI, it has reduced its dependence on expensive data centers and AI servers, making it less vulnerable to the impact of a slowdown in AI infrastructure investment.

The research report notes that Apple is gradually decoupling from the valuation framework of large-cap tech stocks and is instead being viewed by the market as a defensive asset with stable cash flow and high customer loyalty. Apple has approximately 1.4 billion active iPhone users, a brand retention rate of about 90%, its services business contributes about 40% of gross profit, and in 40 of the past 44 quarters, its earnings per share exceeded market expectations. In fiscal year 2026, Apple returned approximately $102 billion to shareholders through buybacks and dividends.

Bernstein believes that Apple's demand visibility, pricing power, cash flow, and stable shareholder returns are sufficient to support a valuation premium, and a 37x P/E ratio is not unreasonable.