Apple overtook Nvidia on Friday to become the world’s most valuable company, reshuffling the top spots of technology heavyweights as investors reassess the prospects for artificial intelligence.
Apple was last valued at $4.88 trillion, as its shares held steady, while Nvidia was around $4.86 trillion, after a 3.5% drop.
Nvidia became the first company in the world to surpass a $5 trillion market valuation in October, a milestone that propelled it into rarefied territory that was far beyond the reach of its rivals.
Being replaced by Apple does not necessarily indicate a lasting change in the companies’ relative position. The chipmaker remains one of the biggest beneficiaries of AI-related spending, and its graphics processors are driving much of the generative AI frenzy.
The change in the pecking order illustrates that investors are broadening their focus beyond the most obvious beneficiaries of the AI boom, such as Nvidia, which had been at the helm for nearly a year. Apple regains the top spot for the first time since April of last year.
“Apple was seen as a laggard in the AI race because it wasn’t spending to develop models, but now sentiment has changed,” said Toni Meadows, chief investment officer at BRI Wealth Management.
Last month, the company launched a long-delayed overhaul of Siri, betting that the improved assistant would help close the gap with big tech rivals and new-age startups in the crucial AI race.
For a company that was often seen as lagging behind in the AI race, the milestone reflects Apple’s efforts to establish itself more firmly among the sector’s major players, and could determine what CEO Tim Cook’s final months at the helm look like. Cook is preparing to hand over his position to hardware veteran John Ternus in September.
Nvidia could regain the top spot if sentiment changes. Apple is in a delicate position, having raised prices to offset rising costs, a strategy that could hurt demand.
“I don’t see any significant distinction. Nvidia is likely to be a major player in anything that happens in the future,” said Benjamin Hall, vice president of alpha research at Segal Marco Advisors.
However, the enthusiasm for AI has spread to other corners of the semiconductor industry. The biggest winners this year have been memory chip makers like Micron, which surpassed $1 trillion in market value in May as investors accepted the importance of memory chips in AI infrastructure.
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South Korea’s SK Hynix also listed on the Nasdaq earlier this month, adding another player to the race for investors’ attention.
“New market entrants could shift the focus away from the pure Magnificent Seven names to a broader number of names,” Hall said.
Chips’ spectacular rally ran into turbulence in July as investors reassessed the sustainability of the AI trade, sending Philadelphia’s SE Semiconductor index down nearly 19% from its all-time highs.
Despite the sharp drop, the index has performed better than Nvidia so far this year.
