Apple Risks Getting Overtaken by Bigger AI Players, Needham Says

Apple Inc. is by far the world’s largest company, but the trend toward artificial intelligence is poised to upend the power rankings on Wall Street, according to Needham.

The iPhone maker lacks a strategy on generative AI and large language models (LLMs) — which powers services like ChatGPT — putting its title at risk, analyst Laura Martin wrote in a Thursday note. AI growth could result in Apple getting overtaken by three other megacaps: Microsoft Corp, Alphabet Inc., and Inc., all of which Martin sees as more established players in the fast-growing arena.

All four big-tech firms are currently members of the exclusive club of companies with valuations exceeding $1 trillion. However, Apple’s market capitalization stands at $2.77 trillion and it accounts for more than 7.2% of the weight of the S&P 500 Index.

By comparison, Microsoft has a valuation of just under $2.5 trillion, while Google-parent Alphabet is at $1.7 trillion. Amazon has a market capitalization of $1.4 trillion.

Apple's Crown Could Be at risk