Key Points
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After spending much of last year underwater, Apple has come roaring back.
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Sales of the iPhone continue to gain ground and are taking market share in China.
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The company was just approved to release Apple Intelligence in China, which could attract more users to the platform.
- 10 stocks we like better than Apple ›
Apple has a long history with the market-cap crown. In August 2018, the iPhone maker became the first publicly traded U.S. company to reach a market cap of $1 trillion. The company added to its resume, becoming the first to reach $2 trillion and $3 trillion in August 2020 and January 2022, respectively. However, the advent of the artificial intelligence (AI) revolution sparked a surge in Nvidia (NASDAQ:NVDA) stock, which became the first to reach $4 trillion in July 2025 and $5 trillion in October 2025.
Apple languished for much of last year, as tariff-related fears and persistent inflation weighed on investor sentiment. However, iPhone sales — the backbone of its business — continued to trudge higher. As a result, Apple has gained 20% thus far in 2026, doubling the 10% rise of the S&P 500.
I predict the iPhone maker will soon overtake Nvidia to once again wear the crown as the world’s most valuable company. Here’s why.
The AI wildcard
The persistent adoption of AI has strained the availability of flash memory and storage chips. Specifically, significant demand for dynamic random-access memory (DRAM) and NAND flash memory chips has far outstripped supply, sending prices for these processors soaring. The impact has gone beyond AI, reaching into the smartphone industry.
China is feeling the heat, as smartphone shipments fell 4.3% year over year, marking the fifth consecutive quarter of declines, according to a report byglobal marketintelligence firm IDC Global. The report noted that “Rising memory and component costs pushed most Android vendors to raise prices, which cooled upgrade demand.”
Customers in China, faced with higher prices for bargain smartphones, opted to upgrade to iPhones, as sales grew 24% year over year, the highest growth rate among all vendors in China, and one of only two to generate growth.
Just this week, Chinese regulators approved Apple Intelligence for deployment on iPhones in the country, marking the end of a two-year licensing process. The company joined forces with Alibaba and Baidu, part of China’s requirement that foreign companies collaborate with local partners. This could attract more users to Apple’s platform.
A winning strategy
The company has long used its supply chain acumen to its advantage over the competition, and this instance is no different. The company has resisted price increases on its iPhones — despite higher input costs — thereby stealing market share from rivals, who were forced to raise prices.
China has historically accounted for 18% of Apple’s sales. By delaying price increases as long as possible, Apple is gaining market share, resulting in a larger installed base for its services, apps, and accessories. Moreover, iPhone users are more likely to adopt other Apple products, in a winning strategy for the company.
Investor sentiment continues to weigh on Nvidia as concerns linger. Any suggestion that AI adoption is slowing could be devastating for the chipmaker — despite the company’s record-breaking results. As an Nvidia shareholder, I have no plans to sell, as the long-term future looks bright.
That said, I suspect strong sales in China and the dawn of Apple Intelligence are the catalysts that could help the iPhone maker overtake Nvidia’s market cap to recapture the crown.
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Danny Vena, CPA has positions in Apple, Baidu, and Nvidia. The Motley Fool has positions in and recommends Apple, Baidu, and Nvidia. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
