2025 has started on a sour note for Apple (AAPL), and the stock has lost over 11% so far, extending its drawdown from all-time highs to over 14%. It also lost its status as the world’s largest company to Nvidia (NVDA), whose share have looked unstoppable over the last few years.

While Nvidia’s market capitalization surpassing Apple might sound like good news for Nvidia investors, they might want to hold back on the celebrations. Why? Let’s begin by analyzing what’s been happening with Apple stock lately.

What’s Happening with Apple Stock?

It seems like Apple investors are experiencing déjà vu. The stock has been hit by three downgrades in 2025 from MoffettNathanson, Loop Capital, and Jefferies, while UBS — which has a “Hold”-equivalent rating on Apple — lowered its estimates for iPhone sales. The iPhone maker also faced three downgrades in January 2024.

The common theme around recent Apple downgrades is primarily linked to tepid iPhone demand – particularly in China – which is the company’s biggest market outside the U.S. Apple lost the crown of the largest smartphone company in China last year as domestic companies like Vivo and Huawei have taken market share. 

Loop predicts a “material iPhone demand reduction” beginning this quarter which it sees “materially amplifying” in the next two quarters. In its note, Jefferies cited third-party data which it says shows “US consumers do not yet find smartphone AI useful,” which implies that the AI-powered iPhone is “unlikely to kickstart a super upgrade cycle anytime soon.” Jefferies also pointed to tepid iPhone demand in its note.

To be sure, not all analysts share the pessimism towards Apple. Dan Ives of Wedbush Securities believes that Apple’s market cap will rise to $5 trillion over the next 12-18 months. He is particularly bullish on the sales outlook for Apple gadgets ranging from iPhones, Macs, and iPads. However, increasingly analysts are getting apprehensive about the AI-driven upgrade cycle and independent data shows the company losing ground in China.

Apple Stock Price Prediction

Apple has a consensus rating of “Moderate Buy.” Of the 36 analysts covering Apple stock, 18 rate it as a “Strong Buy” and 5 as a “Moderate Buy.” 10 analysts rate Apple as a “Hold” while the remaining three rate it as a “Strong Sell.” Apple’s mean target price of $244.91 is 10% higher than Jan. 21 closing prices. The stock’s Street-low target price is $184, while the Street-high target price (via Wedbush Securities) rests at $325.

Nvidia Becomes the World’s Biggest Company, Again

Amid Apple’s woes, Nvidia has now become the world’s biggest company. The Jensen Huang-led company briefly held the crown in 2024 but Apple – which mostly held the title since 2011 – soon reclaimed it following the Worldwide Developer Conference in 2024 where it unveiled a flurry of new AI-powered features that were supposed to be part of its “Apple Intelligence” and were expected to fuel the demand for iPhone 16.

However, it’s now becoming increasingly clear that the AI-powered smartphone hasn’t helped lift demand for iPhones. While we’ll hear more about this when Apple releases its fiscal Q1 2025 earnings later this month, multiple reports point to a slowdown in iPhone sales. While the late and limited rollout of Apple Intelligence features is certainly to blame, there are plenty of indicators that show that the end consumer is not as enthusiastic about AI as the investing community.

In the gadget space also, while the adoption of AI PCs helped the PC market stage a slight rebound last year, the sales growth hasn’t been to the scale once expected. 

This Could Be the Biggest Risk for Nvidia

Despite pouring billions of dollars towards AI capex, many tech companies have failed to realize a commensurate return on investment. While these are arguably still early days, tepid monetization of AI by tech giants is the biggest risk for Nvidia as I noted in a previous article. Investors will soon start questioning tech companies’ AI capex if they don’t see returns on investments. This might prompt tech companies to scale down their AI investments, which would invariably mean buying fewer of Nvidia’s AI chips.

So, while Nvidia might have ended up becoming the world’s biggest company amid the fall in Apple shares, the reason AAPL stock has fallen might soon come back to bite NVDA if more companies struggle to show the financial benefits of their AI outlays.