Lagging behind in the AI race, Apple's market capitalization ranking may be ranked by Amazon and Google

News on September 8, local time in the United States on Thursday, investment company Needham Securities released a research report that Amazon, Google and Microsoft are the three big winners in the field of generative artificial intelligence, while Apple is left behind and may lose the throne of the "highest technology company by market value".

Needham Securities analyst Laura Martin wrote in the report that although Apple is currently the largest company in the world, the development trend of artificial intelligence has the potential to upend Wall Street's power rankings.

Analysts believe Apple's lack of strategy in generative artificial intelligence and Big Language Modeling (LLM), which underpins chatbot services like ChatGPT, puts Apple in a precarious position.

The growth of artificial intelligence could lead to Apple being surpassed by three giants such as Amazon, Google and Microsoft. Martin believes all three companies are more established players in this fast-growing space.

All four big tech companies are members of the so-called "trillion-dollar market cap club," but Apple's market capitalization is as high as $2.77 trillion, or more than 7.2 percent of the S&P 500's weighting.

By comparison, Microsoft has a market cap of just under $2.5 trillion, while Google's parent company Alphabet has a market cap of $1.7 trillion and Amazon has a market cap of $1.4 trillion.

Martin said that while Apple is ahead of other companies, it "is not a central beneficiary of the generative AI trend because it is not an arms dealer." She added that while Apple can "protect its best-in-class ecosystem," Alphabet will eventually surpass Apple in scale "thanks to cloud businesses, generative artificial intelligence, and best-in-class first-party global consumer data."

Martin writes that Microsoft and Amazon have a first-mover advantage in big language models, while "latecomers in the field are doomed to fail." She added that Microsoft, Amazon and Alphabet all have huge cloud businesses that can run large-language models in more cost-effective ways, giving them an edge over AI competition.

Inventories of Alphabet and Amazon have both outperformed the Nasdaq 100 this year, rising more than 50% and 60%, respectively. Meanwhile, the tech-heavy Starkey 100 is up 39% in 2023. Apple and Microsoft shares also gained strongly, but have lagged the Starkey 100 slightly so far this year.

Apple shares fell 3.2 percent on Thursday and fell 6.7 percent over the past two sessions. (little)