Key Points
Apple has underperformed the S&P 500 over the past five years.
Apple's stock is down year to date through Aug. 26.
Investors have been disappointed with Apple's lack of progress or developments in AI.
Apple (NASDAQ: AAPL) has historically been one of the best investments in the stock market. For a while, it was the poster child for growth stocks. Unfortunately, this year hasn't been Apple's best performance, with the stock down 5.5% through Aug. 27.
When you zoom out, Apple's performance hasn't been terrible, but it also hasn't been what you might expect from one of the most successful businesses in history. If you had invested $1,000 in Apple stock five years ago, your investment would be worth around $1,830 today, or $1,870 if you include dividends.
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Again, this isn't terrible. However, if that same $1,000 had been invested in the S&P 500, it would be worth around $1,870, or $2,015 with dividends.
AAPL data by YCharts.
Why has Apple's stock lagged?
Much of the S&P 500's growth has been driven by the "Magnificent Seven" stocks (of which Apple is one) and the recent hype surrounding AI-related developments. Unfortunately, it appears that Apple has been lagging behind in these developments.
Companies like Nvidia, Microsoft, Alphabet, and Amazon have all demonstrated tangible AI capabilities and applications. Apple, on the other hand, hasn't had much concrete AI stuff to show. The company says it will increase investments to catch up on AI developments, but the market appears to remain skeptical until it sees Apple's AI plans come to life.
Apple is known for being cautious when introducing new technologies before they're well-polished, so its relative slowness to adopt AI isn't entirely surprising. If the company returns to its innovative roots, I imagine the next five years could be much better than the previous five.
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Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.