AI advancements are making older iPhone models seem outdated.

The stock market is always shifting as innovations emerge and take precedence. As the iPhone approaches its 20th anniversary in early 2027, Apple has arguably lost its status as the must-own tech stock. Currently, artificial intelligence (AI) is the dominant trend in technology, and Nvidia is the leading company, due to the prevalence of its graphic processing units (GPUs) in AI.

GPUs use parallel processing because they contain thousands of smaller cores that handle data simultaneously. This allows GPUs to execute the matrix math necessary for training AI models, unlike central processing units (CPUs), which process information sequentially and are less suitable for AI tasks.

Nvidia's GPUs are essential for training AI models within large data centers. They also facilitate AI inference, which involves using AI to forecast or generate content in real-time for generative AI applications, such as chatbots, image generators, and coding tools. Inference extends to AI systems in self-driving cars, healthcare, and robotics.

Before the release of ChatGPT in 2022, Nvidia was a niche fabless GPU designer that relied on manufacturers like TSMC to produce its chips. Since ChatGPT's launch, Nvidia's stock has increased twelvefold, adding $1 trillion in market value in only three months. By comparison, it took Apple over a year to increase its valuation from $1 trillion to $2 trillion. At that time, adding $1 trillion to Apple's value meant a 100% stock increase, while Nvidia's rise to a $5 trillion valuation represented a 25% increase.

In July, Nvidia's stock was $164.42, compared to its current price of $207.42. The company's value now equals 50% of Europe's Stoxx 600 index, which includes 600 leading European stocks. If Nvidia's stock follows a path similar to Apple's, its value could continue to increase as AI becomes more widespread. Eventually, fund managers overseeing substantial assets may feel compelled to invest in Nvidia to showcase their portfolios.

Soon after, retail investors may begin purchasing the stock, and the company may be featured prominently in investment publications. However, this could signal a peak, after which only latecomers remain to be exploited.

According to Matt Britzman, a senior equity analyst at Hargreaves Lansdown, Nvidia's $5 trillion market cap signifies its transformation from a chipmaker to an industry creator, adding that the market still underestimates the potential and sees Nvidia as a prime way to capitalize on AI.

The surge in Nvidia's value has increased the net worth of co-founder and CEO Jensen Huang to $179.2 billion, making him the eighth-richest individual globally.

Although Nvidia was the first to reach a valuation of over $5 trillion and is considered the top AI stock, Apple and Microsoft have also surpassed $4 trillion and possess their own AI interests. Experts attribute the surge in AI-related stocks to continuous investment in AI infrastructure, which benefits Nvidia. Some analysts, however, caution that the sector might be overvalued and due for a correction.

While markets tend to anticipate future trends, the impact of a foldable iPhone, potentially arriving next year, remains to be seen. Similarly, investors have not yet priced in the potential effects of a port-less, bezel-less iPhone 20. The relative unresponsiveness to upcoming iPhone developments could suggest a diminishing importance of the iPhone and smartphones in general.