"Depends on AI"... MS-Apple-NVIDIA, Heated Competition for No.1 Market Cap (Comprehensive)

by Cho Seulkina

Published 13 Jun.2024 08:29(KST)

Apple, leveraging generative artificial intelligence (AI) capabilities, briefly surpassed Microsoft (MS) during trading hours to reclaim the top spot in market capitalization. However, by the close of trading, MS regained the lead, confirming a tight race for the title of "the world's most valuable company." Wall Street is also closely watching which of the three companies?MS, Apple, or Nvidia, all members of the $3 trillion market cap club?will be the first to break into the $4 trillion range.

[Image source=AFP Yonhap News]

Apple Adopts AI, Overtakes MS Intraday to Reclaim Market Cap No.1

On the 12th (local time) at the New York Stock Exchange, Apple's stock closed at $213.07 per share, up 2.86% from the previous session. This marked the second consecutive trading day of record highs since the day after the annual Worldwide Developers Conference (WWDC), where Apple unveiled its AI roadmap. During the trading session, Apple's stock surged over 6%, surpassing MS to claim the top market capitalization spot. This was the first time in about five months that Apple had overtaken MS in market cap.

However, as the market closed, Apple gave back some of its gains, and MS maintained the No.1 market cap position based on closing prices. MS's stock closed at $441.06 per share, up 1.94% from the previous session, with a market cap of approximately $3.278 trillion. Apple's market cap was slightly lower at around $3.267 trillion.

Following MS and Apple, Nvidia held the third spot in market capitalization. The AI leader's stock rose 3.55% on the third day after its stock split, regaining the $3 trillion market cap level ($3.085 trillion).

[Image source=Reuters Yonhap News]

AI Roadmap Boosts Expectations for iPhone Sales

Apple, which had briefly fallen to third place behind Nvidia, is now again vying for the top spot, largely due to expectations of increased iPhone sales driven by AI adoption. Previously considered to be lagging behind other big tech companies in the AI race, Apple announced its AI system, "Apple Intelligence," and a partnership with OpenAI, the developer of ChatGPT, at WWDC on the 10th.

Although initial reactions were mixed, with some saying the announcements fell short of expectations, Wall Street analysts have poured in with forecasts that the AI integration will translate into increased sales of new devices, including the upcoming iPhone models scheduled for release in the second half of the year. Bank of America (BoA) stated in an investor memo that "Apple Intelligence could drive a significant upgrade cycle," predicting that AI features will lead to faster device replacement, more conversions, and higher average selling prices. Wedbush Securities commented, "All questions about Apple lagging in AI technology have been answered," adding that "there is clearly demand in the device replacement cycle."

Economic media outlet CNBC also noted that MS, which is neck and neck with Apple for the No.1 market cap spot, could benefit from Apple's AI adoption. MS is the largest investor in OpenAI, the partner announced by Apple. MS's cloud services have shown growth fueled by OpenAI.

[Image source=Reuters Yonhap News]

Who Will Be First to Break $4 Trillion? Competition Among MS, Apple, and Nvidia

Attention is also focused on which company among MS, Apple, and Nvidia will be the first to reach the milestone of a $4 trillion market cap. This ultimately depends on each company's AI strategy. Dan Ives, an analyst at Wedbush, predicted in an investor memo that a market cap race to surpass $4 trillion will occur among Nvidia, Apple, and MS, expecting this to happen next year.

Economic media Barron's recently assessed that Nvidia, the AI leader, has the highest potential based on current trends. This is due to strong demand for Nvidia's graphics processing units and the company's rapid growth fueled by this demand.

So far this year, Apple and MS stocks have risen about 12% and 16%, respectively. Nvidia, the AI leader, has surged more than 150%. Moreover, Nvidia reached a $3 trillion market cap intraday just three months after surpassing $2 trillion. In contrast, Apple took 719 trading days and MS 650 trading days to move from $2 trillion to $3 trillion market caps. Louis Navellier, founder of U.S. asset management firm Navellier & Associates, expressed optimism, saying, "Nvidia will continue to perform strongly," and predicted it could surpass a $4 trillion market cap this year and reach $5 trillion next year.

MS, currently the No.1 in market cap, is also rapidly approaching $4 trillion, fueled by the AI rally. Barron's noted that if companies seeking to fully benefit from AI automation begin widespread AI adoption, MS could surpass Nvidia to reach the $4 trillion level first. The outlet also highlighted the significant gains MS obtains as an investor in OpenAI, the developer of ChatGPT. Furthermore, it assessed that Apple's success depends on how quickly AI spreads in the mobile consumer device sector.