Nvidia Lost Its Top Spot to Apple. What Does History Tell Us About No. 1 Stocks?

A funny thing happened in October. Thanks to a brutal selloff in artificial intelligence stocks to close the month, Nvidia NVDA lost its spot as the largest stock in the Morningstar US Total Market Index to Apple AAPL. This ends a monthslong streak at number one for Nvidia. Apple, a consumer electronics business that’s far from the center of the AI story, has reclaimed a position it has held at several points in recent years.

Does this mark a turning point? Only time will tell whether Nvidia is experiencing a temporary speed bump or if AI-centric market dynamics are shifting.

Historical perspective is called for. How long have stock market champions retained their crowns, and what has become of other top US stocks? Michael Wang from Morningstar’s Analytics team and I looked at 100 years of US stock data from the Center for Research in Security Prices, recently acquired by Morningstar, to find out.

Nvidia and Apple Are in Rare Company

Over the past 100 years, just 12 stocks have topped the US market. According to the CRSP Stock database*, which is more comprehensive than the US total market index, no stock has come close to AT&T T in the 1930s in terms of market share.

Market share for top stocks throughout history parallels the ebbs and flows of concentration. As I discussed in a February column, the US stock market was very top-heavy from the 1920s to the 1960s, when IBM IBM reigned supreme. Then came a multidecade broadening that spanned the bear market of the 1970s and the bull markets of the 1980s and 1990s. Market concentration rose during the late 1990s internet bubble, then fell after the crash, only to spike again in 2020.

Market share for recent champions like Apple, Microsoft MSFT, and Nvidia reflects the modern era of corporate leviathans. Alphabet GOOGL and Meta Platforms META have never hit number one, but they own more market share than some top stocks historically. In the early 1990s, Philip Morris (now Altria MO) and Walmart WMT were market champions with less than 2% share.

Each of the 12 top stocks of the past 100 years represents the transformative technologies or key economic trends of their day. General Motors GM and AT&T are emblems of the automobile and telecommunications ages, respectively. IBM pioneered computing. DuPont DD led in chemicals, Standard Oil in petroleum, while General Electric was initially at the forefront of electrification, then became a conglomerate. Philip Morris was the cigarette king. Walmart is the ultimate brick-and-mortar retailer, while Amazon.com AMZN is synonymous with e-commerce. Microsoft MSFT has been at the center of many technology trends, including personal computing, the internet, the cloud, and AI. Nvidia is the ultimate supplier of “picks and shovels” to the AI gold rush. Apple owns the smartphone era.

How Long Have Market Champions Reigned, and What Became of Them?

Here’s a look at the 12 top stocks of the past 100 years and how their market share changed over time. The graphic below visualizes Nvidia’s meteoric rise in recent years. You also see the longevity of some historical market champions.

Here’s a look at how long each market champion remained in the top spot (through the end of September), as well as the duration and timing of its longest run.

AT&T is in a class by itself for leadership longevity. Ma Bell, as it was known, spent nearly 40 years in total as the top US stock; its longest run lasted from 1929 to 1950. Amazingly, AT&T last held the top stock spot in 1994, a decade after antitrust action broke the company up into regional firms known as Baby Bells.

Volumes could be written about the fates of each of these stocks. Most are still alive in some shape or form. Today’s AT&T and DuPont are fragments of the originals. ExxonMobil XOM and Walmart have gone through ups and downs but continue to thrive. General Motors filed for bankruptcy in 2009, though it remains a going concern. General Electric was split up in 2021 into aviation, healthcare, and energy companies. Philip Morris rebranded to Altria after legal action prompted expansion beyond cigarettes. Amazon.com, like Microsoft, has evolved considerably and remains one of today’s largest companies.

As technology hardware companies, IBM and Apple are relevant precedents to Nvidia. Both enjoyed long tenures as top stocks but have gone through different phases and reinventions. IBM first wore the crown in 1967, last in 1991. That spanned the age of the mainframe through personal computing. Apple was founded in the 1980s and recovered from a period of irrelevance to own the smartphone era. It first became the top stock in 2011 and enjoyed an unbroken run from 2013 through 2018. IBM today is closer in size to AT&T than Apple and Nvidia.

Will Nvidia Recover Its Top Spot?

Nvidia has a wide economic moat, in the view of Morningstar Equity Research, meaning its competitive advantages should allow it to sustain profitability for 20 years. Analyst Brian Colello cites its “market leadership in graphics processing units, hardware, software, and networking tools needed to enable the exponentially growing market around artificial intelligence.”

That’s not to say that competition and innovation won’t challenge Nvidia’s position. Each of the stocks that have topped the US market over the past 100 years seemed invulnerable in its heyday. Who knows how the AI future will unfold?

Even if Nvidia is highly unlikely to rival AT&T’s run of dominance, it has years to go before matching Apple. Writes Colello: “In the long run, we expect tech titans to strive to find second-sources or in-house solutions to diversify away from Nvidia in AI, but these efforts will, at best, only chip away at Nvidia’s AI dominance.” I like the pun! Even if decline is inevitable, it hardly seems imminent.

*CRSP’s Stock database started with securities listed on the NYSE. The American Stock Exchange (NYSE MKT) was added in 1962, Nasdaq in 1972, and NYSE Arca in 2006. Stocks’ market capitalization is not adjusted for free float, which drives some differences in market share between the CRSP Stock database and the Morningstar US Total Market Index.