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Nvidia Poised to Surpass Apple as the World's Second-Most Valuable Company

Nvidia is on its way of surpassing Apple as the world's second most valuable business. The rapid adoption of AI applications has caused Nvidia's stock to nearly treble in value over the last year. Apple's innovation curve appears to have flattened, but Nvidia has been able to precisely align innovation with demand.

As the leading beneficiary of the widespread adoption of artificial intelligence (AI) applications, Nvidia is challenging Apple, which has held the top spot on Wall Street for years.


The soaring demand for AI applications, including OpenAI's ChatGPT, has propelled Nvidia's stock to nearly triple in value over the past year, reaching an impressive US$2.68 trillion. In contrast, Apple lost its top spot to Microsoft earlier this year due to slow iPhone demand and tough competition in China. Apple's current valuation is US$2.92 trillion.


Brian Mulberry, client portfolio manager at Zacks Investment Management, commented on the significance of Nvidia's possible climb, saying, "It is certainly notable because Apple has been so dominant for so long, especially on the growth and innovation front. Recently though, Apple's innovation curve seems to have flattened, showing slower future growth. On the other hand, Nvidia has been able to catch wave upon wave of growth. Beginning with gaming demand, then crypto, and now AI, they have been able to perfectly match innovation with demand, and that equals explosive growth."


Nvidia's significance goes beyond its monetary value. The semiconductor company is important in propelling US stocks to new highs, heavily weighting the S&P 500 and the Nasdaq. In fact, Nvidia accounted for more than one-third of the S&P 500's gains this year.


Notably, Nvidia experienced the highest growth from $1 trillion to $2 trillion in 2024, outpacing tech behemoths such as Amazon.com, Google parent Alphabet, and Saudi Aramco.


Since its outstanding projection a year ago, Nvidia has repeatedly outperformed Wall Street's growth and profit expectations. Demand for its graphics chips has far surpassed supply as major IT companies hurry to integrate AI applications. As a result, analysts' profit projections for Nvidia have been dramatically increased, resulting in a decrease in the stock's forward earnings valuation. It now trades at 37 times forecast earnings, down from 48 times last year.


Nvidia's popularity extends into the derivatives market as well. The GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage move in Nvidia stock, is the largest single-stock ETF. The fund recently achieved a milestone, with daily turnover exceeding $1 billion ahead of Nvidia's most recent financial results. According to Lipper data, its total net assets have reached a record high of $2.82 billion.


Options traders are positive on Nvidia, with volumes, notably for calls, growing in recent sessions following the stock price rally. In fact, Thursday was the sixth consecutive session in which more than a million Nvidia call options were exchanged, setting a new record for the company.

 
  • Nvidia is on the verge of overtaking Apple as the world's second-most valuable company.

  • The surge in adoption of AI applications has propelled Nvidia's stock to nearly triple in value over the past year.

  • Apple's innovation curve seems to have flattened, while Nvidia has been able to perfectly match innovation with demand.


Source: REUTERS

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