Apple (AAPL) Rides Growing Demand for AI-Enabled Smartwatches
Apple Inc (NASDAQ:AAPL) is one of the best stocks to buy for the AI boom in the second half of 2026. Since the year began, Apple shares have returned more than 48%, and analysts expect them to keep rising. Elite investors continue to show confidence in Apple as the company leverages AI to make its products better. Some 170 hedge funds have positions in Apple stock.
Apple Inc (NASDAQ:AAPL) is far ahead in the smartwatch AI race. According to a market report from Counterpoint Research released on July 6, Apple accounted for 90% of AI-capable smartwatch devices shipped in Q1 2026. During that quarter, the shipment of AI-capable smartwatches increased 70% year-over-year to reach 25% market penetration.
The report focused on smartwatch devices with edge AI capabilities. These are smartwatches designed to handle AI processes locally on the device without needing to send the data to the cloud or a paired smartphone.
Apple’s smartwatch sales are tucked under the Wearables, Home, and Accessories segment. This segment revenue rose to $7.9 billion in Q1, up from $7.5 billion in the prior year.
Apple Inc (NASDAQ:AAPL) builds smartphones, laptops, tablets, and other devices. The company also provides a wide range of software and services. Apple is incorporating AI into its products to enhance their capabilities.
While we acknowledge the potential of 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.
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