Key Points
Apple is making deals with AI companies rather than hyperspending on AI development.
Nvidia is in the crosshairs of worries about AI spending.
After being the most valuable company in the world for years, Apple (NASDAQ: AAPL) was kicked down to second place and even third place by Nvidia and Microsoft over the past two years.
But after languishing in market underperformance last year, it's suddenly become a hot stock again. Investor sentiment has taken a positive turn as iPhone sales soar and Apple makes moves to stay dominant in its space, and it's just a hairsbreadth away from reclaiming the title of most valuable company in the world. In fact, it could reach it as you read this.
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Image source: Apple.
As of this writing, Apple has a market cap of $4.89 trillion vs. Nvidia's $4.91 trillion, a difference that normally wouldn't even show up with rounding. The gap has been narrowing, with Apple stock up 12% over the past month, while Nvidia stock is down 4%. To get back up on top, Apple stock needs to gain less than 1%. If current market sentiment persists, it's going to happen quickly.
Why Apple is up -- and why Nvidia is down
The market is prizing Apple's safety and model right now. The artificial intelligence (AI) landscape is changing by the minute, and the market has been worried about gargantuan hyperscaler AI spend. Apple has largely stayed out of it, focusing on its hardware and making deals with AI companies to bring Apple Intelligence to life.
At the same time, the market is worried about how Nvidia is going to fare as AI continues to change, especially because a lot of growth has already been built into its stock price.
What happens next? Market sentiment is fickle, but Apple has proved itself many times over the decades, and it's proving itself once again.
Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.