In an unusual turn of events, Apple's stock price fell by over 5% during Thursday's trading session, breaking below its 100-day moving average. Over two consecutive days, the tech giant faced a sell-off from investors, resulting in a cumulative decline of over 6% and evaporating $190 billion from its market value.
In a report released on Thursday, Laura Martin, an analyst from the renowned Wall Street institution Needham, suggested that the rise of artificial intelligence might challenge Apple's reign as the world's most valuable company. With the growth propelled by AI, companies like Microsoft, Alphabet (Google's parent company), and Amazon could potentially surpass Apple in market capitalization.
Currently, Apple's market value stands at approximately $2.77 trillion, followed by Microsoft at $2.5 trillion, Alphabet at $1.7 trillion, and Amazon at $1.4 trillion. All four companies are members of the "Trillion-Dollar Market Cap Club."
Martin expressed concerns over Apple's lack of strategy in generative artificial intelligence and large language models (LLMs), which could pose risks. While Apple can safeguard its top-tier ecosystem, it isn't a primary beneficiary of generative AI.
She noted that the other three tech giants - Microsoft, Alphabet, and Amazon - are more mature players in the rapidly evolving AI domain. Alphabet, with its cloud business, generative AI capabilities, and unparalleled global consumer data, might eventually surpass Apple in market value. Both Microsoft and Amazon have a head start in the large language model sector, and newcomers in this area are bound to face challenges. The trio's extensive cloud operations allow them to run their large language models more cost-effectively, giving them an edge in the AI arena.
Previously, some super-bullish analysts for Nvidia believed that Nvidia's market value could surpass Apple's current valuation.
However, Apple hasn't been idle in the AI sector. Recent reports from Wall Street suggest that to accelerate the development of large language models, Apple has significantly increased its research budget, spending millions daily. They've also poached numerous engineers from Google, betting big on their 200-billion parameter model, Apple GPT. Apple employees believe that their Apple GPT model has already surpassed GPT-3.5. However, analysts argue that running such massive models requires not only powerful computing but also ample storage space, which might be a stretch for a device as compact as the iPhone.
China Fund News commented that Apple's stock experiencing such a significant drop over two consecutive days is indeed rare. On one hand, the upcoming iPhone 15 series release will face fierce competition from the currently popular Huawei phones. On the other hand, there have been reports of iPhones being banned in certain situations.
Some analysts predict that during the product launch next Wednesday, Beijing time, the high-end iPhone 15's price might be up to $100 more than its predecessor. In recent years, Apple's strategy of nudging consumers towards premium models has been effective, boosting both revenue and profit even when iPhone sales stagnated. However, this strategy might be reaching its limit, and the flagship iPhone product could face challenges.
Other media outlets have commented that adding to Apple's woes is the concern that the Federal Reserve might have to intensify its efforts to combat inflation due to the resilience of the U.S. economy. This has led to the selling off of U.S. Treasury bonds, causing an uptick in U.S. Treasury yields, which also impacts Apple's stock price.
