Apple Surpasses Nvidia to Reclaim Title of World's Most Valuable Company, but Lead May Be Short-Lived

According to Barron's, Apple (AAPL-US) surpassed Nvidia (NVDA-US) this week to once again become the world's most valuable company by market capitalization. However, as market concerns grow over pricing pressures, this leadership position may not last long.

The iPhone maker benefited from a shift in market funds away from AI-related stocks, with its shares rising 0.9% on Tuesday to close at $340.08, a record high closing price. Yet, according to Dow Jones market data, its closing market cap still fell short of the $5 trillion mark.

Apple's current market value stands at $4.995 trillion, exceeding Nvidia's $4.768 trillion, marking the first time since May 2025 that it has reclaimed the top spot globally.

However, some Wall Street analysts believe this could actually be a good time to sell Apple stock. While concerns over cyclical funding and competition from China have weighed on Nvidia and other AI stocks, Apple itself is facing growing challenges.

The company may soon have to raise iPhone prices to offset a significant increase in memory chip costs and weak demand. In particular, if the next-generation iPhone 18 fails to impress consumers, sustaining profit growth could become even more difficult.

Brandon Nispel, an analyst at KeyBanc, stated in a research report on Monday, "Investors are now too complacent." He downgraded Apple to "underweight" with a target price of $250, implying about 26% downside from Monday's closing price of $336.91.

Nispel added, "When semiconductor stocks are sold off, investors view Apple as a safe haven, but we believe the market is overlooking bigger issues." He warned that weak iPhone sales would not only affect hardware revenue but also further drag down revenues from services such as iCloud and Apple Music.

With a year-to-date gain of 24%, Apple's current valuation is no longer cheap. As of Monday's close, Apple's estimated P/E ratio was around 38 times, clearly above its five-year historical average.

Apple has risen 5.7% over the past three trading days, its best three-day performance since July 17. It is up 17.5% for the month, 25.1% year-to-date, and nearly 61% over the past year.

On Tuesday, its intraday high reached $342.89, up nearly 1.8%, setting a new record high during trading.

In contrast, Nvidia's stock rose about 0.3% on Tuesday to close at $197.01, after falling 5% the previous trading day. Nvidia is up 5.6% year-to-date and 12.3% over the past year.

According to Dow Jones market data, Apple's market cap will break the $5 trillion mark for the first time in history if its share price reaches $340.43.

Apple is well-positioned to achieve this historic milestone, but the market widely believes that maintaining such a high valuation and market cap over the long term will be a significant challenge.