Alphabet, Google's parent company, overtook Apple to take the No. 2 spot by market capitalization. Google's sharp stock rally, driven by its prominence in the artificial intelligence (AI) market, was the key factor.
On the 7th (local time) in New York trading, Alphabet shares closed at $322.03, up 2.5% from the previous day. In contrast, Apple shares finished down 0.77% at $260.35.
Based on the closing price that day, Alphabet's market capitalization was $3.89 trillion, surpassing Apple ($3.85 trillion) to rank second. It was the first time since January 2019 that Alphabet's market cap exceeded Apple's. It was also the first time in about eight years, since 2018, that Alphabet became No. 2 by market cap. Alphabet regained the No. 3 market cap spot from Microsoft in November last year and has now surpassed Apple as well. The No. 1 company by market cap remained Nvidia ($4.6 trillion).
The market interpreted the reversal in rankings as a sign of a shift in leadership for the AI era. The companies' different AI strategies have been reflected in their share prices and corporate values.
Google has emerged as a front-runner in the fiercely competitive AI market. Its share price rose 65% last year.
After Google's AI model Gemini secured a strong foothold in the market, the company's in-house designed AI chip, the tensor processing unit (TPU), also gained recognition for its potential, raising expectations that it could encroach on Nvidia's turf. Analyst Nick Jones at BNP Paribas said in a report the previous day that Google is "well positioned to dominate the AI platform market."
Apple, by contrast, has not delivered major results in the AI race. Apple had planned to introduce a next-generation Siri AI assistant but delayed the launch. Apple shares rose 9% last year, underperforming the S&P 500's 16.4% gain.
Wall Street also expressed concern about uncertainty surrounding Apple's AI strategy. Investment bank (IB) Raymond James recently downgraded its investment rating on Apple to "neutral," saying "Apple's upside potential this year is likely to be limited."