4. Apple (NASDAQ:AAPL)
Number of Hedge Funds: 170
Top Pick Of: Warren Buffett’s Berkshire Hathaway
Net Worth: ~$130B+ (Warren Buffett)
Apple was once seen as a laggard in the AI race. Now it is looking like a winner, and without breaking the bank on capex. Apple’s capex-to-revenue ratio stands at just 2.5%, well below the 10%-plus seen at most mega-cap peers. As competitors burn through cash on AI infrastructure and investors question whether those investments will generate returns, Apple is taking a different path.
The company plans to monetize AI through its massive existing customer base. Apple now has over 2.5 billion active devices, up from 2.35 billion a year ago, a gain of 150 million devices in one year. That installed base positions Apple to benefit from the shift toward agentic AI applications, where users need a trusted platform to manage identity, authentication, and payments. Few platforms can match Apple on that front.
The stock is not cheap. It trades at over 35x forward non-GAAP P/E, the highest in the Mag 7 except Tesla. That is roughly 30% above Microsoft and nearly double Meta. Its forward PEG ratio stands at 3.1x, compared to 0.57x for Nvidia and 0.90x for Meta.
Risks remain. Siri still has limitations in intent understanding and AI integration. Devices may also need stronger compute capabilities, including better memory, bandwidth, and neural processing power, before Apple can fully deliver on the AI endpoint opportunity.
RiverPark Large Growth Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2025 investor letter:
“Apple Inc. (NASDAQ:AAPL): AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. While macro softness in China remained a headwind, investors responded positively to evidence of content and advertising revenue re-acceleration within the Services segment, which delivered double-digit growth.
We continue to view Apple as one of the world’s most resilient and profitable businesses, supported by a massive installed base, ecosystem lock-in, and growing high-margin revenue streams. As Apple Intelligence features proliferate across devices, we expect multi-year upgrades, improved monetization, and expanded recurring revenue. With strong cash generation, ongoing share repurchases, and disciplined capital allocation, Apple remains a compelling long term investment.”
