Doubts over Big Tech's massive artificial intelligence (AI) investments have spread, pushing the New York stock market into a breather led by the semiconductor sector. As selling continued around chip-related stocks in particular, the market-cap-leader status of Nvidia, the sector's bellwether, has been shaken. In the process, an ironic situation has unfolded in which the value of Big Tech firm Apple — considered a relatively small AI investor — is rising rapidly. On Wall Street, the prevailing view is that a technical bear market will persist for the time being until signs emerge that hyperscalers' (mega cloud providers') AI infrastructure investments can translate into actual profits.
Apple surpasses Nvidia's market cap intraday for the first time in over a year... lagging AI investment emerges as a strength in a correction
On the New York stock market on the 17th (local time), Nvidia, the world's top company by market capitalization, closed down 2.21% from the previous session. In contrast, Apple, the No. 2 company by market cap, rose 0.14% — virtually the only major Big Tech to gain — even as the Nasdaq Composite Index fell 1.40%, providing a stark contrast. Amid the diverging share prices, the market-cap gap narrowed to $4.908 trillion for Nvidia and $4.9017 trillion for Apple. At one point during the session, Nvidia's stock fell more than 3%, reversing the two companies' market-cap rankings. Apple's rise to the world's No. 1 market cap spot came one year and three months after it lost the top position to Nvidia in April last year.
What separated the direction of Nvidia's and Apple's shares was Wall Street's assessment of AI investment and returns. Recently, Wall Street has forecast that the five major hyperscalers — Amazon, Google parent Alphabet, Microsoft (MS), Facebook parent Meta, and Oracle — have already sharply increased their AI investment spending this year, so that growth will slow for the time being. If the pace of infrastructure investment, such as building AI data centers, slows, demand for the semiconductors that go into them could naturally cool as well. The combined capital expenditure (CAPEX) plans announced by the five major hyperscalers this year total up to $750 billion (about 1,125 trillion won).
That day, "Kimi K3," a low-cost open-source (free) AI model recently unveiled by Chinese startup Moonshot, was also a factor that dampened investor sentiment toward AI Big Tech and semiconductor-related stocks. Wall Street believes Chinese AI models are rapidly narrowing the technology gap with the top models of OpenAI and Anthropic.
Earlier, Nvidia had cemented its position as the unrivaled No. 1 listed company by market cap since June last year, surpassing Apple and Microsoft. Then, on October 29 of the same year, riding the AI investment craze, its market cap topped $5 trillion (about 7,500 trillion won) for the first time in history. After a correction late last year and early this year amid a so-called "bubble theory," Nvidia once again crossed the $5 trillion market-cap barrier on April 24. During this period, the company that briefly challenged Nvidia's dominance was not Apple, but Alphabet, armed with its AI model "Gemini" and its own semiconductor, the Tensor Processing Unit (TPU).
Meanwhile, Apple had been treated by the market as a company past its prime in the AI era. Apple had originally planned to launch the next-generation "Siri" AI assistant service last year but delayed the timing to this year. As a result, on January 7, Apple fell behind Alphabet in market cap as well, sinking to third overall. It was the first time Apple's market cap had been overtaken by Alphabet in seven years, since January 29, 2019. As the situation worsened, CEO Tim Cook — who has led Apple since 2011, succeeding the late former CEO Steve Jobs — also became a subject for replacement after 15 years. From September 1, John Ternus, senior vice president of engineering and a former hardware engineer, is set to lead Apple.
Apple seeks to expand smartphone market share as chip stocks retreat amid overinvestment fears
Nvidia and Apple once again received opposite assessments as Wall Street reevaluated the share prices of AI-related stocks. Nvidia went downhill again as its failed reentry into the Chinese market overlapped with the AI overinvestment argument. Nvidia's current share price of $202.81 is 14.0% lower than its peak of $235.74 on May 14, just two months earlier. The Philadelphia Semiconductor Index also plunged 20.2%, from 14,634.72 on the 22nd of last month to 11,673.89 on the 17th of this month.
On the 8th of this month, Bloomberg reported that based on the 7th's share price ($196.93), Nvidia's 12-month forward price-earnings ratio (PER) stood at just 18 times, the lowest level since early 2019. Although Nvidia is on a record-breaking earnings run this year, Wall Street believes its share price will not track those results for the time being.
By contrast, Apple's stock soared from $275.15 on the 25th of last month, when it announced price increases for the Mac and iPad, to $333.74 on the 17th of this month. The return reached 21.3% in less than a month. Rising for three consecutive trading days recently, its market cap has been setting record highs day after day.
Apple's share price gains reflected, ironically, its lagging position in the AI race as a positive factor. It was not intentional, but the result is that Wall Street is giving high marks for Apple's restraint from overreaching investment.
There is also analysis that the surge in memory chip prices, which triggered the product price hikes, is not necessarily unfavorable to Apple. By pushing other budget and mid-range brands with weaker supply chains out of the market, it could help expand Apple's market share over the long term. Indeed, investors are watching the foldable iPhone, expected to launch this September, as a new growth driver for Apple. Apple is reportedly known to have recently notified suppliers to prepare to increase this year's foldable iPhone production target from the previous 7–8 million units to about 10 million. Apple's fiscal 2026 (October 2025–September 2026) revenue and net profit are also projected to grow 15% and 17%, respectively. This would be the fastest growth rate since 2021. Free cash flow (FCF) is also expected to reach a record high of $140 billion, up more than 40% from last year.
According to Bloomberg on the 1st, Apple is also in chip purchase negotiations with two Chinese memory chip makers recently placed on the U.S. Department of Defense blacklist — ChangXin Memory (CXMT) and Yangtze Memory (YMTC). Both are companies on the "1260H List," which the U.S. Department of Defense has designated as firms supporting the Chinese People's Liberation Army. While the government cannot openly block Apple's purchase of Chinese-made chips, invisible political barriers clearly exist. Cook is reported to have recently directly asked Trump administration officials, including U.S. Treasury Secretary Scott Bessent, to mitigate the potential political fallout from the deal.
If Apple buys chips from CXMT and YMTC, its memory chip suppliers would increase from the current three to five. Currently, Apple relies solely on memory chips from Samsung Electronics, SK Hynix, and Micron.
Not abandoning AI... continuing various attempts including custom chips, M&A, and targeting China
While its conservative investment approach was reevaluated and it reaped the reflected benefit in its share price, Apple has not entirely abandoned its AI response. Because the AI era will inevitably arrive over the medium to long term, Apple has still not stopped trying to find a new breakthrough.
Specifically, Apple recently extended its custom chip (ASIC) partnership with Broadcom, which began in 2023, through 2031. It also announced a multi-year contract worth $30 billion (about 45 trillion won) with Broadcom to build a supply chain to produce 15 billion U.S.-made chips. Apple described this contract as the largest under the "American Manufacturing Program (AMP)" agreement it launched last year. Accordingly, Broadcom will spend $1.5 billion (about 2.3 trillion won) to expand its manufacturing facility in Fort Collins, Colorado, which produces Apple's wireless communication components.
On the 8th of this month, Cook said, "I am deeply grateful to the president and the administration for supporting this important project," emphasizing that the partnership is part of the revival of the U.S. semiconductor industry championed by President Donald Trump. Cook, pressured by President Trump's threats to impose tariffs unless Apple moved its key manufacturing hubs, such as India, to the United States, also in August last year in Washington, D. [BODY]
C announced a plan to invest $600 billion (about 900 trillion won) domestically over four years at the White House.
Furthermore, on the 15th, U.S. information-technology outlet The Information reported that Apple is even exploring the acquisition of an AI chip company. Apple currently powers its internal AI servers with its self-developed "M2 Ultra" chip, but is reportedly struggling with performance issues. It also delayed the launch of its next-generation server chip, developed under the code name "Baltra," which had been slated for release this year. Earlier this year, Apple acquired Israeli startup Q.ai for $2 billion (about 3 trillion won).
On the 15th, Apple also received approval to launch its AI service "Apple Intelligence" in China. As a result, Alibaba's AI model "Qwen" and Baidu's services will be integrated into Apple Intelligence. This comes two years after Apple Intelligence was first unveiled in 2024.
OpenAI's entry into the hardware market is a major variable... attention turns to the era of new CEO John Ternus beginning in September
According to CNBC on the 14th, Apple is also discussing a possible collaboration with a startup that claims it can dramatically compress Siri to cut memory usage by up to 15 times. PrismML, a startup spun off from the California Institute of Technology (Caltech), released two compressed versions of China's Alibaba Qwen for free that day, saying it shrank a model of about 54GB (gigabytes) to under 4GB, enabling all 27 billion parameters to run on iPhone 15 or later models. If this claim holds true, consumers will be able to process more AI computations on their iPhones. This is also a technology that could affect demand for high-bandwidth memory (HBM) in the AI market.
Beyond this, the market is also closely watching OpenAI's moves into the hardware industry as a key variable for Apple's stock price. On the 13th, Bloomberg reported that OpenAI acquired io, the startup of former Apple Chief Design Officer (CDO) Jony Ive, and absorbed more than 400 former Apple staff. OpenAI plans to launch non-smartphone products such as smart speakers next year, and ultimately to introduce products that will compete with Apple's iPhone. The prospect of OpenAI, which operates "ChatGPT," directly entering the hardware market is seen as a considerable threat to Apple. That is because the AI technology gap could potentially bring an end to the iPhone era, which has dominated the mobile phone market for more than 15 years.
In response, Apple went so far as to file a trade-secret infringement lawsuit on the 10th of this month in the U.S. District Court for the Northern District of California against OpenAI and two former Apple employees who moved to the company. At the core of the lawsuit is the claim that Tang Yew Tan, OpenAI's Chief Hardware Officer (CHO), who worked at Apple for 24 years and served as vice president of product design for the iPhone and Apple Watch, and Chang Liu, who worked as a senior systems electrical engineer at Apple for eight years, stole confidential internal information and moved to OpenAI. If the court accepts Apple's demands, OpenAI would be barred from incorporating Apple's technology into the design of its next hardware products.
It is unclear how much longer the stock rally of Apple—a leading Big Tech firm that failed to adapt to the AI era—will continue. Given how steeply and short-term it has surged on the back of controversy over excessive AI investment, it could quickly cede its position as the top stock by market capitalization to another company if the opposite logic spreads on Wall Street. The key question is whether Apple can succeed in improving earnings and defending its stock price while shedding its "AI laggard" label with minimal investment. Above all, Apple's long-term future, which will be reshaped after new CEO Ternus takes office in September, is likely to be a decisive variable in the direction of its stock price.
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