For the past year, Nvidia has basically been sitting on the throne of Big Tech, powered by the AI boom and the insatiable demand for the GPUs running everything from ChatGPT to giant data centers. Now Apple has kicked the door open and taken the crown back.
Apple’s stock jumped more than 1% Monday, pushing the company’s market value to roughly $4.94 trillion and putting it ahead of Nvidia, whose market cap fell to around $4.75 trillion after its shares dropped nearly 5%.
Apple has discovered the “maybe don’t spend everything” strategy
For the past couple of years, Big Tech has been engaged in an AI spending arms race. Alphabet is pouring money into AI infrastructure. Microsoft, Amazon, and Meta are expected to keep doing the same. Nvidia, meanwhile, has become the ultimate beneficiary because all those AI ambitions require a frankly ridiculous number of GPUs.
While competitors were building enormous data centers and buying up computing power like there was no tomorrow, Apple has taken a different route. Its capital spending has actually declined over the past three quarters, rather than exploding alongside the AI boom. That strategy was once a source of criticism, as investors wondered whether Apple was falling behind in AI.
Now Wall Street seems to be wondering if Apple was right to not go completely feral on AI spending.
“Once criticized for not spending more on AI, they have been able to avoid some of those capex pitfalls,” Jay Woods, chief market strategist at Freedom Capital Markets, told Yahoo Finance.
Nvidia’s AI crown just got a little heavier
Nvidia’s rise has been one of the defining financial stories of the AI era. The chipmaker overtook Microsoft for the world’s most valuable company last year and eventually became the first company to break through the $5 trillion market-cap barrier. Its GPUs are the hardware underneath much of the AI infrastructure being built around the world, making Nvidia one of the biggest winners of the generative AI explosion.
But investors are increasingly scrutinizing just how much this AI infrastructure race is going to cost. Nvidia’s shares plunged nearly 5% Monday. Reports that the company is discussing a potential $250 billion financial guarantee tied to an OpenAI data-center project in Ohio added to concerns about the enormous financial commitments surrounding AI expansion.
Apple is playing a different AI game
Apple isn’t exactly sitting out the AI party. At WWDC in June, the company showed off its redesigned Siri, which is supposed to understand more natural conversations, use personal context, and interact with information on your screen.
The company is also pushing Apple Intelligence across its hardware ecosystem. But it doesn’t appear interested in matching the colossal AI infrastructure spending of companies whose entire business models increasingly revolve around cloud computing.
A lot of Apple’s AI processing happens directly on devices. More demanding requests can be handled through Apple’s Private Cloud Compute system. That means Apple can add AI features to the iPhone, Mac, and other devices without necessarily building the same gigantic AI infrastructure footprint as its cloud-heavy rivals.
The $5 trillion question is coming
Apple is now sitting at roughly $4.94 trillion, which puts it tantalizingly close to the $5 trillion mark. Nvidia already crossed that threshold first. If Apple gets there, it would become only the second company in history to reach that valuation. But investors have a more immediate reason to watch the company, as earnings are coming Thursday after the market closes.
Beyond whether Apple is making money, the core question is whether Apple can expand Apple Intelligence across its enormous device ecosystem without suddenly lighting its capital-expenditure budget on fire.
And then there’s Tim Cook’s final boss battle
Apple’s jump in stock holds implications for its CEO, as Thursday’s earnings call is expected to be Tim Cook’s final earnings call as the company’s CEO. Cook will step down on September 1 after leading Apple since 2011, moving into the role of executive chairman. John Ternus, Apple’s longtime hardware engineering chief, will take over as CEO.
When he took over from Steve Jobs in 2011, Apple was valued at roughly $350 billion. Now, it’s pretty much knocking on the door of $5 trillion.
Under Cook, Apple expanded its hardware empire with products such as the Apple Watch and AirPods while building an ecosystem with more than 2.5 billion active devices around the world. And his final stretch as CEO is ending with Apple reclaiming the title of the world’s most valuable company.
Who is winning the AI race?
The market-cap title can change quickly. With Nvidia and Apple trading places recently, this is far from a permanent coronation—and only time will tell who stays on top. But Nvidia still has one of the strongest positions in the AI infrastructure boom. Apple, on the other hand, still has to prove that its slower, more restrained AI strategy can deliver the features customers actually want.
Sources: Yahoo Finance, Business Standard, Quartz