Key Points
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Apple surpassed Nvidia to become the world’s largest company by market cap once again.
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Its shares trade at a premium relative to other megacap stocks.
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That premium could be worth paying for several reasons.
- 10 stocks we like better than Apple ›
Apple (NASDAQ: AAPL) has long been one of the most valuable companies in the world. But the iPhone maker saw its shares underperform many of the biggest artificial intelligence (AI) stocks over the last few years, ultimately leading it to lose its throne as the top company by market cap to Microsoft in May 2025, before Nvidia surpassed both companies in June 2025.
It’s been over a year since Apple was the most valuable company in the world, the longest streak since it first climbed to that position in 2011.
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But investors have been piling into its stock recently, pushing the market cap to about $4.9 trillion and making it, once again, the most valuable company in the world. Here’s why the stock keeps climbing and why it can continue higher from here.
Image source: Getty Images.
Apple isn’t like all the other megacap stocks
While some of the world’s largest companies build out extensive AI infrastructure, Apple has remained a relatively asset-light business. Its capital expenditures (capex) for the past 12 months have totaled $11 billion. By comparison, Microsoft is spending about $200 billion this year, as are Alphabet and Amazon.
While those three cloud computing giants directly monetize their capex by selling access to their platforms, they’re also taking on significant risks. These are magnified by the long-term commitments they’re making to building, maintaining, and servicing all their data centers. Alphabet revealed $811 billion in future commitments with its most recent earnings report.
Growing unease about the hyperscalers’ huge capex plans has started to weigh on AI stocks. Alphabet shares fell notably after its earnings release, despite strong growth in both its cloud computing business and its core advertising operations.
That fear extends to Nvidia. If investors aren’t confident that AI spending will produce strong returns in the future, that implies less spending on Nvidia’s GPUs.
The rotation from the capital-intensive hyperscalers to the asset-light (relatively speaking) Apple is a flight to safety. But it could also be a move that pays off in the long run, as the company could continue higher even if fears about all the AI computing spending abate.
Can Apple stock keep climbing from here?
Apple stock certainly isn’t cheap anymore. It currently trades for roughly 39 times forward earnings expectations. That’s a very high price for a company that’s expected to grow earnings just 10% to 16% over the next few years. It’s also a premium to the faster-growing hyperscalers, which trade between 16 and 26 times forward earnings. As a result, some may see little room left for Apple stock to keep rising.
But the company could deliver strong earnings without capital risk over the next few years, which not only warrants a premium but could also make its current premium appear cheaper than it appears.
There are a few catalysts that could drive earnings (and the stock) higher from here. It starts with the iPhone. Many expect Apple to increase its price this fall, passing on higher component costs to consumers.
It wouldn’t be alone in doing so, as other consumer electronics companies have already raised prices. Users may be more willing to pay up to upgrade their iPhones this fall as it’s finally releasing its AI-powered Siri revamp, which requires newer hardware.
Apple is already finding that its Mac product line is immensely popular among AI enthusiasts, thanks in part to the architecture of its M-series chips. Management has the opportunity to build on that popularity, further develop its chip capabilities, and become the go-to brand for on-device AI development and use. It is also building out its private computing platform with its own chip designs.
Combined with the company’s ability to take complex capabilities and make them easily accessible to consumers, the early attraction of its devices for AI among enthusiasts could set the stage for a huge inflection in demand for its products down the road. As on-device AI capabilities improve, Apple stands to benefit from added service revenue as well, either through the App Store or by selling premium AI services directly.
While the push to build its own computing platform will cut into free cash flow, it remains one of the few megacap companies still producing gobs of cash every quarter. It consistently buys back shares, which in turn helps increase earnings per share.
As Microsoft, Amazon, and Alphabet have poured more cash into AI computing, they don’t have the capacity to offset share-based compensation and decrease outstanding shares. That should naturally produce a gap in price-to-earnings ratios between Apple and the hyperscalers.
As a result, there’s still room for the stock to climb higher from here, but investors will want to pay attention to how customers respond to its higher-priced devices and services later this year.
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Adam Levy has positions in Alphabet, Amazon, Apple, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
