Apple (AAPL) has had a rough start to the year, with a year-to-date loss of nearly 5%. This underperformance compared to the average S&P 500 Index ($SPX) peer is not a new story for the tech giant. Last year, Apple only managed to gain 8%, which was less than half of what the broader index delivered.
Adding insult to injury, Alphabet (GOOG) (GOOGL) has surpassed Apple to become the world’s second-largest company after Nvidia (NVDA). If it weren’t for Microsoft’s (MSFT) underperformance, Apple might have been pushed down to the fourth position. This shift in rankings is a stark contrast to 2011 when Apple dethroned ExxonMobil (XOM) to become the world’s most valuable company.
Until 2024, Apple held onto its position as the world’s largest company, but things changed when both Nvidia and Microsoft surpassed it. Nvidia’s dominance in artificial intelligence (AI) infrastructure has propelled it to the top spot, while Microsoft’s fortunes have been affected by concerns over OpenAI. Alphabet, on the other hand, has stepped up its AI game with Gemini, prompting a shift in the market’s valuation of AI plays.
Despite receiving a downgrade from Raymond James at the beginning of the year, Apple still has a consensus rating of “Moderate Buy” from analysts. The stock’s mean target price of $289.48 is 11.6% higher than the Jan. 9 closing price. However, with a forward price-to-earnings (P/E) multiple of nearly 32x, analysts don’t expect significant gains from Apple this year unless the company can introduce groundbreaking features.
Looking ahead, Apple may outperform its tech peers if the AI bubble bursts, as it never fully benefited from the AI rally. Alternatively, the company could enhance its AI capabilities by releasing updated Siri and adding more “Apple Intelligence” features to its products. Ultimately, whether Apple regains its position as the biggest company will depend on factors like Nvidia’s stock performance and Apple’s ability to innovate in the AI space.
Overall, Apple’s future is uncertain, but the company remains a key player in the tech industry. Investors will be watching closely to see if Apple can turn things around and reclaim its title as the world’s most valuable company.
This article was originally published on Barchart.com.
