The world's largest market capitalization position is unstable! Needham: AI may subvert Apple's dominance

Laura Martin, an analyst at Needham, a well-known Wall Street institution, said in a report on Thursday that Apple (AAPL.US) is currently the world’s largest company by market capitalization, but the artificial intelligence trend may subvert the company’s dominance.

Martin said the iPhone maker’s lack of strategy in generative artificial intelligence and large language models (LLMs) would put its title at risk. The growth of artificial intelligence may cause Apple to be overtaken by three other giants: Microsoft (MSFT.US), Google (GOOGL.US) and Amazon (AMZN.US). Martin believes that these three giants are more mature players in this fast-growing field.

Currently, these four large technology companies are members of the $1 trillion market capitalization club. However, Apple’s market capitalization reaches approximately US$2.77 trillion, accounting for more than 7.2% of the S&P 500 Index.

By comparison, Microsoft's market capitalization is just under $2.5 trillion, Google parent Alphabet's $1.7 trillion, and Amazon's $1.4 trillion.

Martin said that although Apple is ahead of other companies, it is "not a core beneficiary of the generative AI trend." She added that while the company can "protect its best-in-class ecosystem from churn," Google will ultimately be at scale "thanks to its cloud business, generative AI capabilities and best-in-class first-party global consumer data." surpass Apple.

Martin also pointed out that Microsoft and Amazon also have first-mover advantages in LLM, and "late entrants in the LLM field are doomed to fail." She said Microsoft, Amazon and Google have huge cloud operations and can run LLM in a more cost-effective manner, giving them an advantage in the field of artificial intelligence.

So far this year, Google and Amazon have outperformed the Nasdaq 100 Index, with gains of more than 50% and 60% respectively. Meanwhile, the tech-heavy Nasdaq is up 39% in 2023. Apple and Microsoft have also posted strong gains, although they have slightly lagged the Nasdaq so far this year.

On Thursday, Apple closed down 2.92%, and has fallen 6.7% in the past two trading days. The rare two-day plunge in its stock price has caused the company's market value to evaporate by approximately US$200 billion.

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