Could Apple Lose Its Crown? Insights on Future Market Shifts of Tech Giants
With a market cap of $3.4 trillion, Apple leads the pack, but challenges are mounting. Three stocks may soon overtake the tech giant.
Challenges Facing Apple
Apple isn’t the innovative leader it once was; it has fallen behind in terms of new, groundbreaking products. Recent launches, including the iPhone 16, have struggled, particularly with the much-touted Apple Intelligence features failing to impress.
The result? Apple has not increased its sales since 2022.
Despite flat sales, Apple’s stock remains overpriced, trading at 30.5 times forward earnings. This high valuation is unjustifiable for a company that isn’t growing and makes it vulnerable to competitors that might overtake its market cap.
Failing to show growth soon could force Apple to decrease its valuation while potentially allowing other companies to move ahead.
Nvidia and Alphabet in Close Competition
Looking to the future, three companies show potential to surpass Apple: Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). These companies currently rank among the largest in the world.
Each has unique strengths for gaining market cap over Apple.
Nvidia is just 5% away from surpassing Apple. The demand for its graphics processing units (GPUs), crucial for artificial intelligence (AI) model development, is through the roof. With Wall Street expecting 42% revenue growth for fiscal year 2026, Nvidia could quickly eclipse Apple, even with its lofty valuation of 47 times forward earnings.
Microsoft follows closely behind, only 11% away from overtaking Apple. Over the last year, Microsoft has seen revenue growth of over 15%, propelled by its AI-driven cloud computing service, Azure. With a forward earnings multiple of 31.5, Microsoft has the necessary growth to justify its valuation, making it a potential threat to Apple.
Alphabet’s Path to Market Growth
Alphabet’s situation is more complex; it requires improvement in valuation to outpace Apple. Despite experiencing low teen revenue growth in the past year, Alphabet trades at only 21.5 times forward earnings, which is below the S&P 500 average of 23.5.
If Alphabet were to command a valuation similar to Apple’s, it could see a 42% increase in its market cap, reaching $2.88 trillion and narrowing the gap with Apple significantly. Should trends continue—if Alphabet maintains growth while Apple stagnates—the gap may close further within five years.
Additionally, if Apple’s premium valuation diminishes to match market averages, it would further assist Alphabet in surpassing it.
There is a genuine likelihood that Apple may fall behind these three companies if its sales do not improve soon. A successful new product could change this narrative entirely.
A Fresh Opportunity for Investors
Many investors fear they have missed their chances on top-performing stocks. However, there might still be strong opportunities on the horizon.
Occasionally, expert analysts issue a “Double Down” stock recommendation for companies poised for significant growth. This may be the perfect moment to invest before prices surge. The returns so far highlight the potential:
- Amazon: If you invested $1,000 in 2010, you’d have $21,022!
- Apple: A $1,000 investment in 2008 is now worth $43,329!
- Netflix: A $1,000 investment in 2004 would be a staggering $393,839!
Currently, new “Double Down” alerts for three promising companies are being issued, and this opportunity may not last long.
See 3 “Double Down” stocks »
*Stock Advisor returns as of October 7, 2024
Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet. The Motley Fool holds positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool also recommends long January 2026 $395 calls and short January 2026 $405 calls on Microsoft. The Motley Fool maintains a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.