Nvidia Poised to Surpass Apple in Value

Nvidia Stock

Nvidia (NASDAQ:NVDA) is on the brink of overtaking Apple to claim the title of the world’s second-most valuable company, signaling a shift in Wall Street dynamics as the AI powerhouse challenges the long-standing dominance of the iPhone maker.

The soaring demand for Nvidia’s high-end chips, integral to virtually all artificial intelligence applications including OpenAI’s ChatGPT, has propelled the company’s stock value to nearly triple over the past year, reaching $2.72 trillion.

In contrast, Apple relinquished its top spot to Microsoft earlier in the year, grappling with weakening iPhone demand and fierce competition in China. Its market capitalization currently stands at $2.93 trillion.

Brian Mulberry, client portfolio manager at Zacks Investment Management, remarked on the significance of Nvidia’s ascent, highlighting the company’s ability to sustain innovation and capitalize on emerging growth opportunities, unlike Apple whose innovation curve appears to have plateaued.

Nvidia’s influence extends beyond its market value; the semiconductor giant holds significant weight on the S&P 500 and Nasdaq indices, playing a pivotal role in driving U.S. stocks to record highs. It has contributed to over a third of the S&P 500’s gains this year alone.

Notably, Nvidia achieved the fastest transition from $1 trillion to $2 trillion in 2024, surpassing tech giants like Amazon, Google-parent Alphabet, and Saudi Aramco.

Despite its meteoric rise, Nvidia has consistently exceeded Wall Street’s revenue and profit expectations, buoyed by the relentless demand for its graphic processors amid the rapid integration of AI technologies by major tech companies.

While analysts have substantially revised their earnings estimates upwards, Nvidia’s forward earnings valuation has moderated, currently trading at 37 times forward earnings compared to 48 times earnings a year ago.

The company’s popularity extends to the derivatives market, with the GraniteShares 2x Long NVDA Daily ETF tracking double the daily percentage change in Nvidia’s stock value, becoming the largest single stock ETF.

Options traders have shown bullish sentiment toward Nvidia, with call volumes surging in recent sessions amidst the stock’s upward trajectory. Thursday marked the fifth consecutive session recording over a million Nvidia call options traded, reflecting unprecedented investor interest in the company’s prospects.

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