AI spending creates new winners
Nvidia became the first company in the world to surpass a $5 trillion market valuation in October, a milestone that propelled the company into rarefied territory beyond the reach of rivals.
Being replaced by Apple does not necessarily signal a permanent change in the relative positions of the two companies. The company remains a major beneficiary of AI-related spending, and its graphics processors are behind much of the generative AI frenzy.
If sentiment changes, NVIDIA could regain the top spot.
Additionally, Apple itself is in a delicate position, raising prices to offset rising costs, a strategy that could hurt demand.
“I don’t see a meaningful distinction,” said Benjamin Hall, vice president of Alpha Research at Segal Marco Advisors. “Whatever happens next, Nvidia will be a key player.”
But enthusiasm for AI has spread to other areas of the semiconductor industry. This year’s bigger winners have been memory chip makers such as Micron, whose market capitalization topped US$1 trillion in May as investors embraced the importance of memory chips in AI infrastructure.
South Korea’s SK Hynix also listed on the Nasdaq earlier this month, adding another company to the race for investors’ attention.
“New entrants to the market may broaden their focus from pure Magnificent Seven names to more names,” Hall said.
July saw spectacular chip market turmoil, with the Philadelphia SE Semiconductor Index down about 19% from its all-time high as investors reassessed the sustainability of artificial intelligence trading.
Despite the steep decline, the index has performed better than Nvidia so far this year.
