Apple and Alphabet Stocks Look Vulnerable. Here's How Far They Could Drop. — Barrons.com

What happened

Apple stock is near all-time highs after avoiding heavy AI infrastructure spending, but its $5 trillion market cap is raising valuation concerns. Alphabet is down 22% from its May 18 high and in bear market mode.

Confirmed

Global impact / market context

Investors are questioning whether huge AI spending is worth it, which pressures the premium paid for megacap tech stocks. If that premium shrinks, both companies could face lower valuations, affecting shareholder returns and positioning.

Analyst inference

The Roundhill Magnificent Seven ETF gained 6% this year, trailing the S&P 500's 12% rise, showing the group's leadership is weakening. Performance has diverged sharply within the group, with Apple strong and Alphabet weak.

Analyst inference

What to watch

1. Apple's stock is showing signs of technical fatigue, and investors are uneasy about its newly reached $5 trillion market cap, questioning whether that valuation can be sustained. Confirmed
2. Watch whether Apple's relative performance against the State Street Technology Select Sector SPDR Fund keeps lagging, since that weakness could signal further constrained upside ahead. Analyst inference
3. Watch whether Alphabet stays in bear market mode, defined as down 22% from its 52-week high, which could keep investors cautious on megacap tech leadership. Analyst inference

Evidence

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