Apple Shares Drop 10% as Investors Pivot to AI Leaders

Shares of Apple Inc. have fallen approximately 10% since hitting a record high on July 28, 2026. This decline follows a market rotation where investors shifted focus away from Apple's capital-light AI strategy toward companies directly benefiting from artificial intelligence infrastructure.

Strong earnings reports from Microsoft, Amazon, and Alphabet renewed investor confidence in AI spending, ending a period where Apple served as a safe haven for those skeptical of massive AI capital expenditures. This shift has positioned Apple as one of the worst performers in the S&P 500 over a three-week period.

The AI boom is also creating operational headwinds for the company. Increased demand for data centers has driven up memory chip prices, raising Apple's production costs. Analysts at Jefferies Group warn that these elevated costs may compress profit margins or necessitate price increases for future devices, including an expected foldable iPhone, which could potentially limit consumer demand.