Apple (AAPL): Trailing in AI Spending or Exploring a Different Path?

Fundsmith, an investment management firm based in London, has released its annual 2025 investor letter for its “Fundsmith Equity Fund.” A copy of the letter can be downloaded here. The fund focuses on investing in equities globally. The T Class Accumulation shares where the firm invested returned 0.8% in 2025, compared to 12.8% for the MSCI World Index (‘Index’) in sterling with dividends reinvested. Since its inception, the fund has returned 1.7% p.a. more than the index. The fund attributed its underperformance during 2025 to index concentration, the growth of assets in Index Funds, and weakness in the dollar. In addition, please check the fund’s top five holdings to know its best picks in 2025.

 In its fourth-quarter 2025 investor letter, Fundsmith Equity Fund highlighted stocks such as Apple Inc. (NASDAQ:AAPL). Apple Inc. (NASDAQ:AAPL) is an American multinational company that designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. The one-month return of Apple Inc. (NASDAQ:AAPL) was -5.23%, and its shares gained 11.56% of their value over the last 52 weeks. On January 12, 2026, Apple Inc. (NASDAQ:AAPL) stock closed at $260.25 per share, with a market capitalization of $3.85 trillion.

Fundsmith Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2025 investor letter:

"When commentators discuss the future of artificial intelligence and whether there is a bubble in AI investments they often seem to miss the point. AI may have a profound effect on our lives and employment but that does not guarantee that investment in it will attain an adequate return or that returns will gravitate to the present incumbents.

One company which intrigues us in this respect is Apple Inc. (NASDAQ:AAPL). Depending upon your point of view it has either been left behind in the scramble to build Large Language Models (‘LLMs’) and hyperscale to provide AI infrastructure or it has opted out of the race. As a result, its capital expenditure in 2025 was a mere $12 billion which pales into insignificance in comparison with the companies in the table above.

It may be making a virtue of necessity but maybe Tim Cook the CEO is working on an old adage, ‘You don’t have to own a cow to sell milk’. Apple has its devices and about a billion mostly high-end consumers locked into them and increasingly into its services. It seems unlikely that there will be a shortage of LLMs that the hyperscalers will want to offer Apple for iPhone users. If this is indeed the business model Apple is relying on it may not bode well for the LLM developers and/or hyperscalers’ profitability."

Apple Inc. (NASDAQ:AAPL) is in 8th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 166 hedge fund portfolios held Apple Inc. (NASDAQ:AAPL) at the end of the third quarter, which was 156 in the previous quarter. Apple Inc. (NASDAQ:AAPL) reported revenue of $102.5 billion in the September quarter, reflecting an 8% year-over-year increase. While we acknowledge the potential of Apple Inc. (NASDAQ:AAPL) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Apple Inc. (NASDAQ:AAPL) and shared the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.