Apple set to overtake Google to become world’s second most valuable company: What’s driving the surge?
Apple is very close to becoming the second most valuable company in the world, behind only Nvidia. Based on current market capitalization, Apple has a market value of approximately US$4.56 trillion, while Google parent company Alphabet has a market value of approximately US$4.43 trillion. This means that if Apple stock continues to perform well, its stock price could be ahead of Alphabet’s.
Nvidia remains the world’s most valuable company, with a market value of about $4.78 trillion, but the gap between Nvidia and Apple has become much smaller Dow Jones Market data. Apple’s current market value is only about US$200 billion lower than Nvidia, which shows Apple’s rapid rise.
Why Apple is chasing Nvidia
A year ago, the differences between Nvidia and Apple were much greater. On August 4, 2025, Nvidia’s market value was $1.37 trillion higher than Apple’s, which was the largest gap between the two companies since Apple lost the top spot. Apple shares rose as investors continued to buy shares of the company even as it faced questions about its artificial intelligence (AI) plans and rising component costs.
Why investors support Apple
Meanwhile, Nvidia’s stock price has slowed after a sharp rise over the past few years. Mike Reynolds, vice president of investment strategy at Glenmede, said via Marketwatch that many investors are now looking for artificial intelligence investment opportunities outside of Nvidia, rather than putting all their money into one company.
“Investors are looking for AI companies outside of Nvidia,” said Mike Reynolds, explaining the trend. Reynolds also said via Marketwatch, “When you’re the largest stock in the world, you have a target on your back and people are trying to weaken your moat, and I think that’s part of what we’re seeing.”
Another reason investors are wary of Nvidia is that big tech companies are designing their own AI chips rather than relying solely on Nvidia. Companies like Alphabet and Amazon are already developing custom AI chips based on their needs.
Apple’s Intelligent AI Strategy
Apple has also joined the fray, signing a deal with Broadcom to develop custom chip components for its artificial intelligence products. On June 25, 2025, Nvidia surpassed Microsoft and became the most valuable company in the United States. Microsoft’s market value has now fallen to just under $3 trillion, well below Nvidia, Apple and Alphabet.
As Marketwatch points out, investors are no longer as confident about Microsoft’s massive AI spending and are questioning whether the investments will generate adequate returns. Unlike many of its rivals, Apple has been more cautious in its AI spending, rather than investing billions of dollars in building large-scale AI infrastructure.
Apple has chosen to use external AI models for certain features through its partnership with Google Gemini, rather than building everything itself. Reynolds said investors are now paying more attention to companies that can add AI capabilities to products people already use, rather than just companies building AI hardware.
Apple’s AI plans boost confidence
Apple shares are up about 15% this year, and Alphabet shares are up about 18%, making them the best-performing stocks on the stock market. “The Great Seven” technology companies. According to a report from Marketwatch, Nvidia’s stock price is still rising this year, but only by about 6%, which is lower than the market’s increase of about 9%.
Apple’s recent Worldwide Developers Conference (WWDC) marked a major turning point as the company finally unveiled a clearer AI strategy. Many investors waited nearly two years to learn how Apple would make money from artificial intelligence.
Wedbush analyst Dan Ives believes that Apple’s artificial intelligence plan can create huge value for shareholders. “They basically ripped the Band-Aid off and now here we are, it all comes down to monetization,” Dan Ives said after Apple’s WWDC presentation, via 24/7 Wall St. Ives estimated that AI could add “$75 to $100 a share” to Apple’s stock price. He also said that artificial intelligence could generate an additional $100 billion in revenue based on Apple’s existing services business.
Apple business grows strongly
Apple data shows that in the second quarter of fiscal year 2026, Apple’s service business revenue reached a record high of 30.976 billion US dollars. Apple currently has more than 2.5 billion active devices worldwide, providing a huge customer base for its AI services. Apple is rebuilding Siri and allowing Gemini and Anthropic selection Use its equipment.
Morgan Stanley analyst Eric Woodring believes Apple’s artificial intelligence plans could change investors’ valuation of the company. Woodring said Apple’s WWDC event “has the opportunity to reposition Apple as an AI winner,” 24/7 Wall St reported. Morgan Stanley raised its Apple price target to $360 from $330 after the event and said that in the best-case scenario, the stock could even rise above $440.
Evercore ISI also raised its Apple target to $365 from $330, saying Apple smartphones can generate new revenue without huge capital expenditures. Apple announced revenue of US$111.18 billion in the second quarter of fiscal 2026, a year-on-year increase of 17%. Thanks to strong demand for the iPhone 17 series, iPhone sales reached $56.99 billion. Apple also announced it would repurchase $100 billion in stock and increase its quarterly dividend by 4% to $0.27 per share.
Risks to Apple’s Growth
Even before announcing a comprehensive artificial intelligence strategy, Apple’s market value had increased by about $1.6 trillion over the past year, or about 52%. Barclays and UBS said that despite optimism about Apple’s artificial intelligence plans, some analysts are still cautious about Apple’s artificial intelligence plans. Barclays and UBS said the new AI features “are incremental and unlikely to drive a major iPhone upgrade cycle.”
UBS analyst David Vogt initiated coverage on Apple with a neutral rating and $296 price target via 24/7 Wall St. Prediction market Polymarket sees only a 1.8% chance of Apple hitting $360 by the end of June, suggesting traders remain skeptical. Polymarket also gives Apple about a 70% chance of staying at $296 or below during this period.
Apple stock trades at a price-to-earnings (P/E) ratio of about 40 times, meaning investors expect strong future growth and the company has little room for error. Although Apple is investing cautiously in artificial intelligence, competitors such as Alphabet, Amazon, and Meta Microsoft Oracle is investing heavily in AI chips, data centers and infrastructure.
Can Apple maintain its lead?
Analysts expect the five companies to spend about $4.8 trillion on capital investment between 2026 and 2030, Reuters reported. This massive spending puts a strain on their finances, with free cash flow expected to decline significantly before recovering later in the decade.
Reuters warns that even though investors currently expect strong growth across the industry, not all companies investing heavily in artificial intelligence will be winners. The report said investors may be committing the “fallacy of composition,” believing that if AI benefits one company, it will automatically benefit every company in the industry.
Overall, Apple’s stable financial performance, rigorous artificial intelligence strategy, strong services business and growing investor confidence have helped it approach Alphabet and become the world’s second most valuable company.
