Too much AI exposure? Can Apple be the diversification play in your portfolio? What Indian investors need to know

As investors grow wary of the billions US tech giants are pouring into AI infrastructure—and whether that spending will translate into returns—they are looking for ways to diversify their tech bets. Apple is quietly emerging as an alternative, offering exposure to technology without taking on the same heavy AI infrastructure spending risk.

Why investors are eyeing Apple?

Apple shares have gained about 7% over the past month versus a 1% gain for the Nasdaq-100. More strikingly, he 30-day correlation between the second-largest company in the world and the Nasdaq-100 Index reached a low of negative 0.86, its most inverse level since 2005.

The key difference is capital spending, or capex, points out Viram Shah, Founder & CEO, Vested Finance.

Unlike, other major hyperscalers Apple is renting AI capacity rather than building it. Due to this, Apple spent about $6.8 billion on capex in the first nine months, far below the spending by big AI players. Amazon, Alphabet and Meta each spent between $30 billion and $54 billion in a single quarter. Collectively, these companies are expected to spend around $600–725 billion this year.

“So if you buy Apple, you get the tech exposure without the AI infrastructure risk. And it's still returning cash - $62 billion of buybacks in nine months. That's why it's behaving as a hedge.”

But is it actually a hedge?

Of course not! Apple should not be viewed as a hedge against technology stocks altogether, as per Shah.

“It remains a major technology company and can move differently when investor enthusiasm for AI changes. In fact, Apple moved in the opposite direction when the AI trade recovered in mid-August.”

Sandeep Nambiar, Co-Founder and CEO, OneCap, adds that though investors currently like Apple's approach because it still generates strong cash flow, there is flipside to it. “If AI becomes the layer people actually live inside, then renting it means renting your future”

For investors, the bigger takeaway is that US technology is increasingly splitting into different investment themes. So, “diversification across them matters more than chasing whichever one is working,” Shah suggests

How Indian investors can diversify their US portfolio:

Investors who have put too much money into AI and technology stocks may want to diversify through US ETFs.

• For broader market exposure, RSP (Invesco S&P 500 Equal Weight ETF) reduces dependence on a few very large companies. VTI (Vanguard Total Stock Market ETF) provides exposure to a much wider range of US stocks.
• Investors can also consider more defensive sectors that are generally less sensitive to market cycles than technology. These include utilities (XLU), healthcare (XLV) and consumer staples (XLP).
• For investors looking for dividends and more stability, NOBL (ProShares S&P 500 Dividend Aristocrats ETF) focuses on companies that have increased their dividends consistently for at least 25 years.