Apple’s Stock Is For Losers

By Douglas A. McIntyre Published Jul 20, 10:45AM EDT

Key Points

Apple Used To Be The Market Cap Leader
Apple Has Fallen Behind The Competition In AI

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Apple’s Stock Is For Losers — © IPhone 16 series in Apple Store Nagoya Sakae (CC BY-SA 4.0) by Kyu3a

Across this year, shares of the “Magnificent Seven” have not traveled in the same direction. Among the best examples of how differently they have performed is that Nvidia (NASDAQ: NVDA | NVDA Price Prediction) has moved higher by 28% this year. Apple (NASDAQ: AAPL) is down 16%. Nvidia is the world’s market cap leader at $4.2 trillion. Apple, which had been the most valuable company for years, has dropped to third place with a market capitalization of $3.2 trillion.

The trading patterns in Apple and Nvidia are based almost entirely on the fact that one is the AI sector’s leader, and the other has fallen hopelessly behind.

Nvidia has about 90% of the global market share for add-in-board GPUs, which is a primary reason for the rally. And Nvidia’s earnings have been strong. In its quarterly report, it offered a rosy picture of its near-term future. Revenue increased 69% year-over-year to $44.1 billion. Per-share earnings rose 27% to $0.76. The company added, “Excluding the $4.5 billion charge and related tax impact, first quarter non-GAAP diluted earnings per share would have been $0.96.”

In the current quarter, the company expects revenue of $45 billion, plus or minus 2%. Its extraordinary revenue growth continues. According to Yahoo, the analysts’ forecast is slightly higher than that.

Because industry analysts believe AI server farm construction will rise, Nvidia’s earnings could rise at the current pace for years.

Apple has missed the introduction of advanced AI features among the largest tech companies. And, recently, its rivals have started to hire away its AI software talent. Apple says its next-generation AI product will be introduced next year. The market expected that to happen at about the same time the iPhone 16 was launched. iPhone users can download most consumer-facing AI software from their competitors, like OpenAI, for free. The iPhone can have state-of-the-art AI features, but they are not Apple’s.

It has become increasingly clear that Apple cannot catch up to AI market leaders. Every day, it falls further behind. It may soon become nothing more than a hardware company. It may continue to be that sector’s leader, but it’s not what investors want.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.