Nvidia shares fell nearly 5% on Monday, weighing on semiconductor stocks as investors grew more cautious about the durability of the artificial intelligence investment boom. The decline also pushed Nvidia below Apple in market capitalisation, ending its run as the world’s most valuable publicly traded company. (Sources: Yahoo Finance, CNBC)

Apple reclaimed the top spot among global companies after its shares rose while Nvidia dropped sharply. The move reflected a rotation toward companies seen as having steadier earnings profiles, even as concerns persisted around heavy spending on AI infrastructure.

Investor anxiety also resurfaced over the possibility of "circular financing" in the AI ecosystem. Reports suggesting Nvidia could support large-scale AI infrastructure investments involving major AI firms renewed questions about whether aggressive spending commitments would ultimately generate sufficient returns.

The selloff extended beyond Nvidia. Semiconductor stocks across the supply chain came under pressure as investors reassessed valuations tied to AI and re-evaluated demand expectations. Memory chipmakers and equipment suppliers also recorded declines, underscoring how closely the current market rally has been tied to a narrow group of AI beneficiaries.

Sentiment was further affected by developments in China’s semiconductor industry. The strong debut of Chinese memory-chip maker CXMT added to concerns about growing competition and the possibility of pressure on global chipmakers.

The AI rally has been driven by massive spending on data centres, advanced chips and computing infrastructure. But investors are increasingly questioning whether the expected returns will justify the scale of investment by technology companies, especially as those costs flow through multiple parts of the supply chain.

Nvidia remains one of the main beneficiaries of the AI boom, supplying advanced processors used in data centres and artificial intelligence applications. Yet after a sharp rise in valuation, the stock has become more vulnerable to concerns about competition, spending cycles and future growth expectations.

Apple’s recovery points to a broader shift in investor preference. While AI-linked stocks have become more volatile, companies with strong consumer ecosystems, stable cash flows and consistent earnings growth are attracting renewed attention.

Markets will now look to upcoming technology earnings, AI infrastructure spending plans and management commentary on future investment. Those updates will help show whether the recent surge in AI-related capital spending is continuing at the same pace and how companies are framing returns on those outlays. The central question remains whether AI spending will translate into sustainable profits or whether valuations have risen faster than fundamentals.