It’s the $5 trillion (or more) question of the year: will it be AI chip darling Nvidia (NASDAQ:NVDA | NVDA Price Prediction) or the iPhone juggernaut with a looming CEO change in Apple (NASDAQ:AAPL) that will be crowned the world’s largest company before the year comes to a close?
With Apple taking the briefest of leads before Nvidia retook the top spot as semiconductors bounced back after a tough showing in recent weeks, questions linger as to which Mag Seven stock has what it takes to be even more magnificent as investors look forward to what the next chapters of the AI revolution hold.
Nvidia and Apple: Which has what it takes to be number-one?
For Nvidia, the Vera Rubin ramp is going to be the talk of the town, but, for the most part, strength is already an expectation despite the now depressed price-to-earnings (P/E) multiple on shares that’s modest enough for some to classify it as a value stock in spite of the cyclical nature of semiconductors.
As for Apple, CEO Tim Cook is handing the keys over to John Ternus come September. It’s a sad moment when you consider just how magnificent Apple has performed under Cook’s leadership.
Indeed, it’s come to the point where it’s unrealistic to expect such performance under Ternus, and while the great transition is coming at a time when Apple is seeing a multitude of catalysts coming online (a wave of product launches and the release of Siri AI — finally!), I still think it’s a mistake to doubt Ternus as he looks to take Apple to another level in the same way Cook did when he took over from Steve Jobs.
If anything, having a product guy at the helm might be what Apple needs to leave the rest of the Mag Seven, including Nvidia, behind, as it looks to reclaim the top spot by market cap. Right now, it’s looking like a picture-perfect handoff come September as Ternus enters the CEO’s office.
Another trio of tailwinds for Apple
With a low-cost AI strategy, the AI plan sorted out in China, the “Apple Upgrade” device leasing program, and a wave of recent sell-side analyst price targets, perhaps it should be no mystery as to why Apple stock is emerging as a leader again. With new catalysts and supercycle potential, which might still catch most analysts off-guard, perhaps the seemingly obscene 40.3 times trailing price-to-earnings (P/E) multiple is more than worth paying.
Is the stock expensive? Most definitely. But it’s being rewarded for playing in the AI race without all that ridiculous spend. And with the new upgrade programs’ potential to supercharge the supercycle, I think 2027 could be one of the best years for revenue growth in a long time. In my view, the program is the perfect way to convince consumers to upgrade despite recent memory chip-related price increases. The “AI tax” is becoming unavoidable, and something like Apple Upgrade, I believe, is the perfect way to push consumers to buy.
In a market that’s soured on spenders (hyperscalers will have colossal CapEx) and sellers (the semis and everything going into data centers) at the same time, it feels like the best way to play AI is not via the sellers or buyers of these so-called picks and shovels, but with the companies actually using AI to create value.
Why Siri AI looks destined to win
From the consumer AI perspective, Apple’s hybrid approach with on-device and cloud AI isn’t just saving people tokens; it’s delivering tangible, differentiated benefits from AI.
Whether we’re talking about lower latency, deeper personal context, enhanced privacy, or behind-the-scenes features that enhance the user experience, Apple is going above and beyond just raw smarts; it’s actually extracting the gold to be had from the AI revolution without reckless spend through a combination of brilliant collabs and its customer-first approach to building.
As long as they start with the customer (that’s just a part of their culture), I think Apple might be the firm that ultimately wins the AI race as it starts with applications and goes from there — the opposite of what spend-heavy, build-first hyperscalers seem to be doing.
Maybe Apple was right to not follow the herd by risking its credit quality to raise considerable debt to build AI data centers, after all. And maybe John Ternus will be able to take Apple to an even higher level. In any case, my chips are on Apple over Nvidia despite the valuation discrepancy.
The bottom line
If anything, the swollen multiple on Apple stock, I believe, isn’t high enough, given Apple’s potential to win massively next year as new devices sell and its AI delivers in ways rivals simply cannot quite yet.
So, forget a supercycle; a platform-shifting megatrend, I think, could be in the cards as iOS 27 acts as the most transformative upgrade in the company’s history. As for Nvidia, I think it’s going to keep doing what it does best (knocking balls out of the park), but, ultimately, it’s at greater risk of succumbing to the semi sell-off, which, I don’t think, is over with quite yet.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks