Apple Shouldn’t Be The Most Valuable Company In The World
Apple just reclaimed its throne as the world's most valuable company, but surging component costs, falling smartphone sales, and a crowded AI landscape are already threatening its grip on that title.
As the AI trade collapsed, so did the shares of AI companies and megacaps facing negative cash flow because of their expense commitments to AI data centers. Nvidia (NASDAQ: NVDA | NVDA Price Prediction), the world’s most valuable company, sold off in the panic; Apple (NASDAQ: AAPL) became the world’s most valuable company. It has held that position before. It doesn’t belong there now.
Even if AI is out of vogue today, Apple faces several hurdles, the first of which is component costs. AI data center chip demand has driven up the cost of many parts used in iPhones and other Apple products. Apple can accept lower margins or raise prices for consumers. As CBS News pointed out, “We have never seen a component price increase this much, this quickly.” The news outlet also reported that Apple management admitted price increases were coming.
Research firm Counterpoint observed that smartphone sales were falling worldwide. Rising prices were at least part of the reason. In a report last week, its researchers reported, “Global Smartphone Shipments Hit a New Low with 20% YoY Decline, Lowest in 14 Years as Continued Memory Constraints Tighten Supply.” There was some good news for Apple: its global smartphone market share reached 22%. That did not, however, keep unit sales from declining overall.
The new iPhone 18, in its various versions, is already extremely expensive. Its new Duo two-screen product starts at $1,999.
Apple has avoided the impression that its products have substandard AI features. Google will provide it with a tailored version of Gemini. Given Gemini’s universal availability on other devices, Claude, Grok, and ChatGPT, the new Apple integration may not be very desirable.
AI is not dead. People, though it is not certain how many, will pay high prices for Apple product. Its challenge is how high. When your products are overpriced, the value of your stock becomes a big question mark.
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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.
