Apple briefly became the world’s most valuable company on Friday, overtaking Nvidia as investors sold off semiconductor shares.
Apple’s ascent signaled skepticism about the sustainability of the AI boom. On Wall Street, the tech-centric NASDAQ and the S&P 500 were down by 1.4% and one percent, respectively.
It wasn’t just in the U.S. either; stock markets in Europe and Asia fell as investors reassess the artificial intelligence market.
The last time Apple was the world’s most valuable company was in May last year. It ended Friday valued at $4.9 trillion. Nvidia briefly dropped to $4.86 trillion before recovering to roughly $4.92 trillion. Apple’s shares are up 23% this year.
In October, Nvidia became the world’s first company valued at $5 trillion. However, shifting sentiments suggest that investors are gaining confidence in Apple, which is catching up in the AI race — and is now close to becoming the second company ever valued at $5 trillion.
The Financial Times suggests that investors favor Apple’s limited spending on AI infrastructure, such as data centers. At a time when Big Tech is investing as much as 39% of its capital expenditure on the energy-hungry centers, Apple is forecast to spend just 2.5% of its budget on physical infrastructure.
“Apple was seen as a laggard in the AI race because it wasn’t spending to develop models, but now sentiment has changed,” Head of Investment at BRI Wealth Management, Toni Meadows, tells The Guardian.
As Google, Meta, and Amazon pour billions into AI data centers, investors are increasingly asking how those enormous investments will pay off. There’s no doubt AI is the hottest technology in the world right now, but there is still no clear answer as to how it will generate the revenue needed to justify, and ultimately sustain, such massive spending.
Investors are increasingly asking who stands to benefit from the AI boom, and Apple, with its 2.5 billion active devices, appears best placed to take advantage. In June, Apple revamped Siri, its AI virtual assistant, to a positive reception. If Apple can continue finding meaningful ways to bring AI features to its customers, it could turn its enormous installed base into one of the clearest and most reliable revenue opportunities in the AI era.
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