Mr Musk had held the position since September 2021 when he took over the top spot from Amazon founder Jeff Bezos.
Mr Arnault runs the world’s largest luxury brands conglomerate, which includes companies such as Louis Vuitton, Tiffany, Celine and Tag Heuer.
The new Twitter owner lost his position at the top of the list on Monday, after Tesla shares, which have lost half their value in 2022, fell around 6.3 per cent, according to Forbes.
Tesla has seen a sell-off since Mr Musk reluctantly closed his $44bn for Twitter in October.
Mr Musk, whose wealth comes almost exclusively from his Tesla stock, hit the top of the list thanks to shares in the company increased more than 1,000 per cent in two years.
Mr Arnault owns more than 60 per cent of LVMH’s voting share class and is worth around $186.2bn, while Mr Musk ended Monday with an estimated value of $184bn, according to Forbes.
Mr Musk, who also owns more than 40 per cent of SpaceX’s shares, has seemingly concentrated a lot of his focus on Twitter since his purchase of the loss-making San Francisco-based company in an effort to turn it around.
“At such a key time for Tesla, Musk is focusing all his energy on Twitter, which is not a good look and an overhang on Tesla,” Wedbush analyst Dan Ives told Forbes.
“The tweets by Musk are creating more noise, which creates a negative for Twitter and therefore Tesla.”
Mr Arnault passed Mr Musk twice last Wednesday, but the Tesla CEO had regained his position by the time the US markets closed.