AI Delays, China, and a $600B Bet: Apple’s High-Stakes Balancing Act

Having swiftly recovered from President Trump’s ‘Liberation Day’ in early April, the Magnificent 7 stocks once again embody U.S. hegemonic influence. Composed of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, each serves as a critical layer in cloud computing, e-commerce, semiconductors, mobile OS, digital advertising and social platforms, while Tesla has yet to fulfill its robotaxi and humanoid robotics potential.

Year-to-date, Roundhill Magnificent Seven ETF (MAGS) is up nearly 19%, holding Nvidia as the largest weight at 14.63%, with Apple and Meta Platforms at the bottom, at 14.12% and 13.61% weights, respectively. Individually, Alphabet (GOOGL) and Nvidia (NVDA) have been the most performant, neck and neck at ~32%, while Apple (AAPL) and Amazon (AMZN) are at the bottom at 3% and -1.5% respectively.

Over the last three months, however, Apple stock has had a solid performance of nearly 20%, rising above even Nvidia, but still heavily behind Alphabet and Tesla, which both equalized gains at an impressive 38%.But does that warrant a genuine re-rating of Apple’s valuation moving forward, or is Apple likely to become the Mag 7 laggard?

Apple’s Exposure to US-China Tensions

Having been the beneficiary of globalization, Apple leveraged China’s rapid rise as an advanced manufacturing ecosystem, combining both highly skilled workforce and an extensive supplier network in the Shenzhen industrial hub. According to an Evercore ISI estimate in March, Shenzhen’s sprawling “Foxconn City” accounts for around 80% of Apple’s manufacturing capacity for smartphones, the company’s core revenue.

Outside of smartphones in China, Vietnam is responsible for 90% of Apple’s wearables, while India should take up to 20% of smartphone production by the end of 2025, according to Bernstein analysis.

Apple’s Mac Pro remains the only product manufactured in the U.S., specifically in Austin, Texas.

After the abrupt reversal of the ‘Liberation Day’, USG granted exclusions from reciprocal tariffs to smartphones and computers, saving Apple’s bottom line. Still, on a quarterly earnings call, Apple CEO Tim Cook estimated up to $900 million extra costs if “no new tariffs are added”.

After the most recent tension escalation in October, when President Trump threatened extra 100% tariffs on Chinese imports, Jefferies brokerage slashed Apple’s price target from $205.16 to $203.07 per share. In that scenario, dependent on China’s leverage of rare earth elements dominance, a 130% tariff would exert a 5% cut on Apple’s fiscal 2026 earnings per share.

In early August, Cook met with President Trump, having announced the commitment to spend ~$600 billion over the next four years in the U.S..

“The whole thing is set up in other places, and it’s been there for a long time in terms of cost and all, but I think we may incentivize him enough that one day he’ll be bringing that back.”

President Trump after meeting with Apple CEO Tim Cook at the White House

The fact remains, for the foreseeable future, Apple is fundamentally beholden to China despite diversifying into India and announcing the American Manufacturing Program. In turn, Apple is subservient to the geopolitical currents between Washington and Beijing.

Case in point, when USG banned the sale of Chinese Huawei, ZTE and other communication products in May 2019, China restrained itself from responding too severely, outside of levying extra tariffs on US imports. But with understanding this was a move for industrial protectionism benefitting Apple – under the guise of national security – it remains unclear if Beijing’s restraint would hold if Apple were to become a direct bargaining chip in a future escalation.

In such a scenario, Apple would face a structural pressure that even a $600 billion U.S. investment pledge may not fully offset. At the same time, the afforded industrial protectionism against Chinese competitors represents a significant advantage.

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Is Apple’s Lackluster AI Implementation Significant?

Previously, we covered in-depth Apple’s lagging implementation of AI, largely concluding it is warranted given the robustness level of current AI models and their confabulation problem. Yet, despite the delay of AI features announced in June, the very promise of their potential appears to have majorly boosted the sales of the latest iPhone 17 model.

According to the latest International Data Corporation (IDC) figures, Apple is now neck and neck with Samsung in terms of global market share, at 18.2% vs 19% respectively. iPhone 17 sales and preorders outpaced iPhone 16, making for the company’s “best results ever in a July quarter”.

In total, Apple shipped 58.6 million units in Q3 2025, representing a 2.9% growth year-over-year. For comparison, the leading Samsung shipped 61.4 million units, achieving 6.3% growth.

The bottom line is, Apple’s cutting-edge chip A19 Pro, leveraging the 3-nanometer process, still ranks first in performance. As such, its 16-core Neural Engine makes a solid foundation for local AI tasks and hybrid workflows combining CPU, GPU and NPU.

Consequently, when Apple Intelligence fully rolls out and integrates seamlessly across the ecosystem, it could very well redefine user expectations for mobile AI. Equally so, iPhone 17’s association with “AI readiness” has arguably created a new kind of status benchmark. Much like Tesla’s full self-driving (FSD) feature, owning the device then becomes a race for future-proofing.

Apple Stock Price Target

With a price-to-earnings (P/E) ratio of 37.86, most analysts are still bullish on Apple’s prospects. According to the Wall Street Journal consensus, the average AAPL price target is now slightly above the current price of $249.34, at $251.19 per share. The bottom outlook for Apple stock is $180, while the ceiling price target is $310 per share.

For fiscal Q3, the company reported $94 billion revenue, up 10% year-over-year. Apple continues to incentivize investors with industry-breaking stock buybacks of $70.57 billion, on top of a cash dividend of $0.26 per share.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.