Apple has reclaimed its position as the world's most valuable company, surpassing Nvidia for the first time in 15 months. Analysts suggest that Apple, previously criticized for lagging in artificial intelligence (AI) investments, has been reassessed positively as concerns grow over the massive capital expenditures of big tech companies.
On July 27, Apple’s stock closed at $336.91, up 1.17% from the previous trading day, bringing its market capitalization to $4.948 trillion. In contrast, Nvidia's stock fell approximately 4.8% to $196.51, marking its largest single-day drop since June 5, with a market capitalization of $4.759 trillion, ceding the top spot to Apple.
Apple lost its long-held title as the most valuable company to Microsoft in April 2022. Nvidia then overtook Microsoft about two months later, fueled by demand for AI semiconductors. Nvidia's market capitalization soared to $4 trillion in July 2022 and reached a record high of $5.7 trillion on May 14, 2023, but has since entered a downward trend.
The recent shift in rankings is attributed not so much to a sudden surge in expectations for Apple’s AI capabilities, but rather to increasing caution regarding the substantial AI capital expenditures and the potential for recovering investments among major tech firms. Alphabet, Microsoft, Amazon, and Meta are projected to spend $724 billion on AI this year, with estimates rising to $950 billion next year. These companies are expanding bond issuances and capital increases to secure data centers and advanced semiconductors, but the timeline for realizing returns on these investments remains uncertain.
Meanwhile, Apple, often labeled as the 'AI laggard' among major tech firms, has opted to reduce costs by leveraging Google’s AI models and cloud services instead of investing heavily in its own AI infrastructure. While previously criticized for its reluctance to invest in AI, Apple is now being viewed more favorably for maintaining financial health and capital efficiency.
Jay Woods, chief market strategist at Freedom Capital Markets, told Yahoo Finance, "Apple was once criticized for not investing more in AI, but that has allowed it to avoid several pitfalls related to capital expenditures."
Daniel Newman, CEO of Futurum Group, noted, "Investors see the volatility in AI-related stocks and view Apple as a sort of index holding. Apple is being regarded as a safe asset."
Conversely, concerns are growing around Nvidia, the leading AI stock, regarding the sustainability of its investments and trading structures. According to Bloomberg, Nvidia has announced over $750 billion in AI-related deals with companies like SK Group and OpenAI, but there are fears that a circular trading structure could develop, where Nvidia invests in its clients or provides financing, leading those companies to purchase Nvidia semiconductors in return.
Gary Tan, portfolio manager at Allspring Global Investments, stated, "Nvidia's investments and partnerships bolster confidence in long-term AI infrastructure expansion, but investors remain wary of the circular trading structure."
* This article has been translated by AI.
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