Apple Surpasses Nvidia to Reclaim Global Market Cap Crown as AI Spending Sparks Credit Concerns, Nvidia Drops 5%

According to a report by Wall Street Journal, news that Nvidia (NVDA-US) is deeply involved in AI infrastructure deal negotiations exceeding $750 billion has sent shockwaves through the credit derivatives market, with the cost of its default protection surging by a record amount in a single day. Meanwhile, Apple (AAPL-US) has been rewarded by the market for its conservative capital spending strategy, surpassing Nvidia in market capitalization and reclaiming the title of the world's most valuable listed company.

Data from ICE Data Services shows that Nvidia's 5-year credit default swap (CDS) spread surged as much as 14 basis points in a single day, reaching 82 basis points—the largest intraday increase since the contract became actively traded last November. As a result, Nvidia's stock closed down 5% on Monday.

Apple's stock has risen 24% year-to-date, closing up 1.2% on Monday, with a market capitalization of approximately $4.93 trillion, surpassing Nvidia's $4.78 trillion.

The divergence between these two companies highlights a deep market divide over the trajectory of AI capital expenditure—whether massive investments in AI infrastructure serve as a moat or pose a potential credit risk. Investors are now re-evaluating this balance.

On Friday evening, Nvidia and South Korea's SK Group announced a collaboration agreement exceeding $500 billion in AI. Nvidia is also negotiating a $250 billion guaranteed deal with OpenAI to support the latter's leasing of a data center project in Ohio developed by a SoftBank subsidiary. The disclosure of these deals has drawn widespread market attention.

The sheer scale of these transactions is putting pressure on debt markets. Sal Naro, Chief Investment Officer at Coherence Credit Strategies, said: "The capital expenditure required to build AI infrastructure is enormous, and debt markets are facing a supply shock. The market is concerned that opaque financial structures, off-balance-sheet transactions, and complex intercompany relationships could create 'financial alchemy,' potentially leading to credit rating downgrades."

Such large-scale financing typically requires investment-grade credit ratings. However, AI firms like OpenAI and Anthropic PBC are currently in a high-burn expansion phase and are unable to independently achieve such ratings. This means that the backing of large tech companies like Nvidia becomes crucial for these debts to receive high ratings.

Apple's 'Asset-Light' AI Strategy Gains Market Favor

Apple's stock has risen over 22% year-to-date, leading the 'Magnificent Seven' tech giants. Jay Woods, Chief Market Strategist at Freedom Capital Markets, noted: "Apple was once criticized for insufficient AI investment, but now it's seen as having successfully avoided the capital expenditure trap."

Apple's capital expenditure has declined for three consecutive quarters, in stark contrast to its peers. Alphabet recently raised its full-year capital expenditure guidance to support AI infrastructure; Tesla (TSLA-US) has also increased spending to advance its Robotaxi and robotics businesses. Both companies saw their stocks fall after earnings reports—Alphabet is up only about 3% year-to-date, while Tesla has plunged nearly 30%.

The market is now awaiting earnings reports from Microsoft (MSFT-US), Amazon (AMZN-US), and Meta Platforms (META-US) this week, all of which are expected to announce further increases in AI-related spending.

Apple will release its earnings after U.S. market close on Thursday. Investors will closely watch the progress of its 'Apple Intelligence' features and assess whether the company can scale AI without significantly increasing capital expenditure or compressing operating margins.

Notably, Thursday will mark CEO Tim Cook's final earnings call before stepping down. He will officially retire on September 1, transitioning to Executive Chairman, with longtime Apple hardware engineering leader John Ternus taking over as CEO.