Is Apple the Next Big AI Trade After Nvidia?

Apple briefly overtook Nvidia in market value, reaching about $4.88 trillion as Nvidia shares fell 3.5%. Apple’s stock has gained 23% year to date amid investor bets the company can bring AI to consumers without building large data centres.

Market participants are re-evaluating where returns from artificial intelligence may appear along the tech value chain. Nvidia has been a major beneficiary of the surge in demand for chips and systems used by cloud providers and AI developers. Apple is pursuing a different path by integrating AI features into devices and services while keeping control of the customer relationship.

Apple reported in January that its installed base exceeded 2.5 billion active devices. Analysts say that reach gives Apple a direct distribution channel to mainstream consumers. HSBC analyst Nicolas Cote-Colisson upgraded Apple to Buy and raised his price target to $366 from $260, citing restrained spending and a strong product pipeline. Citi analyst Asiya Merchant raised her target to $365 from $315 and maintained a Buy rating, pointing to opportunities from the company’s Apple Intelligence work, demand for premium devices and potential market-share gains.

Toni Meadows, head of investment at BRI Wealth Management, noted investors now view Apple differently and emphasized that the company is less exposed to capital-intensive development and may monetize AI through services, device upgrades and its ecosystem.

Analysts expect initial benefits to appear in user engagement and services revenue rather than an immediate surge in iPhone sales. Improvements to Siri are central to that outlook because enhanced voice and generative features could reach mainstream users through existing device interfaces without requiring a separate chatbot application. Apple still needs to show that new AI features change user behaviour and generate measurable revenue.

Tests ahead include the reliability of AI-driven features, rollout in key markets and the extent to which they prompt device upgrades or paid subscriptions. The recent share rally has raised expectations for Apple, leaving the stock exposed if device demand or services growth fall short of forecasts.

Nvidia continues to supply the computing power for large AI models and could reclaim the top market-value position. The two companies operate in different segments of the same AI ecosystem: Nvidia on infrastructure, Apple on consumer distribution. The market response reflects debate over where commercial returns from AI will be captured.