Apple’s most valuable product isn’t the iPhone

Apple CEO John Ternus, alongside vide president of industrial design Molly Anderson, shows off the new iPhone Duo during an Apple event at the Steve Jobs Theater in Apple Park in Cupertino, California, on Sept. 9, 2026. Photo by Karl Mondon / AFP via Getty Images

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The new folding-screen iPhone will set you back US$1,999 for the base model — new territory for an Apple Inc. handset. Apple’s stock is even more expensive, though. Trading at 36 times the coming year’s expected earnings, its valuation multiple is higher than it has been since the early days of the iPhone, when the company was growing like wildfire.This summer, Apple has opened up a big, sustained valuation premium over Microsoft Corp. (25), Alphabet Inc. (26), Amazon.com Inc. (27), Nvidia Corp. (18) and Meta Platforms Inc. (21). Among the “Magnificent Seven” only Tesla Inc. has a richer price-to-earnings ratio — and only because it is inflated by low earnings.Apple never approached the top spot on the valuation table, even briefly, before late last year. For many years, its multiple was depressed by fears that its dominance in phones would prove fleeting, as Nokia’s and BlackBerry’s did. And then its growth rate was slow by big tech standards. That latter point remains true: the market expects Apple’s earnings to grow at a high single-digit rate in the next few years, slower than its big peers. The company also faces new challenges, notably input cost inflation and slowing growth in its services business. And yet its valuation is pulling away. Why?Explaining stock markets is more art than science, but here’s an informed guess: Apple’s valuation reflects investors’ desire to own tech stocks that are not concentrated bets on AI. “Apple tends to be countercyclical from a risk appetite perspective,” says David Vogt of UBS. A year or two ago, when enthusiasm for AI was running hot, there was no Apple premium to speak of. “What has changed is the view that doing billions in capex to support the AI model makers might not be the best investment.” Apple is more or less sitting out the AI money fight.

Even before the latest wave of worries about the existential risk from self-improving frontier AI models, then, markets were signalling discomfort with the AI trade by giving Apple a premium. Having AI chief executives concede that they might lose control of their own technology, just as they are preparing for public listings, will not put anyone at ease. But there is more to the Apple premium than the absence of AI risk in a market crammed with the stuff; Apple is selling trust in a world that is increasingly short of it.

Privacy is a cornerstone of Apple’s sales pitch. Former boss Tim Cook almost never made a public presentation without hammering on Apple’s promise to keep customers’ data safe, even from Apple itself. The new chief executive John Ternus followed the pattern at the start of the new phone launch. “Apple Intelligence” — the AI tool that the company is building into its devices — runs locally where it can, and uses an encrypted “private cloud” when more computer power is required. Other companies “see [your] data as something to collect.”

The pitch has worked brilliantly at keeping Apple customers loyal; iPhone users almost never switch to other brands. And trust is exactly what the AI companies are missing right now and will need to establish if they are to live up to Wall Street’s dizzy expectations.

Trust is built on accountability, but the AI companies — from hyperscalers like Google to model builders like OpenAI and Anthropic — have been unable and unwilling to make themselves accountable. Apple, in the internet age, promised: “your data will be safe.” The AI companies cannot even promise that their product will not go rogue and harm you. Instead, they have focused on what someone else — the industry as a whole, third-party monitors, the government — needs to do to make sure their technology stays under control. Anthropic CEO Dario Amodei’s letter calling for an industry “pause” is best read as an effort to socialise, rather than accept, accountability for product safety at his company. Until he and his company start making hard commitments, in the way Apple did with privacy, trust will remain beyond reach.

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