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

Nvidia on the Cusp of Surpassing Apple as World's Second-Most Valuable Firm

In a remarkable turn of events, Nvidia, the semiconductor powerhouse that has emerged as the biggest winner in the surge of AI application adoption, is poised to overtake Apple and claim the title of the world's second-most valuable company. The widespread reliance on Nvidia's high-end chips by virtually all artificial intelligence applications, including OpenAI's ChatGPT, has catapulted the company's stock to nearly triple in value over the past year, reaching an astonishing $2.68 trillion.

Apple, which has long held the crown as the largest Wall Street firm by market value, surrendered its top spot to Microsoft earlier this year as the once soaring company grapples with lackluster demand for its iPhones and fierce competition in China. The tech giant was last valued at $2.92 trillion, putting Nvidia within striking distance of surpassing it.

Brian Mulberry, client portfolio manager at Zacks Investment Management, remarked on the shift, stating, "It is undoubtedly significant because Apple has been so dominant for so long, particularly in terms of growth and innovation. Lately, however, Apple's innovation curve appears to have plateaued, indicating slower future growth. Conversely, Nvidia has been able to ride wave after wave of growth. Starting with gaming demand, then crypto, and now AI, they have been able to perfectly align innovation with demand, resulting in explosive growth."

Nvidia's impact on the broader market is undeniable. The company carries significant weight on both the S&P 500 and the Nasdaq, and has been instrumental in propelling U.S. stocks to record highs. In fact, Nvidia alone accounted for more than a third of the S&P 500's gains this year.

The semiconductor company's ascent has been nothing short of extraordinary. Nvidia became the fastest company to grow from $1 trillion to $2 trillion in 2024, outpacing tech giants like Amazon, Google-parent Alphabet, and even Saudi Aramco.

Since its blockbuster forecast about a year ago, Nvidia has consistently surpassed Wall Street's ambitious expectations for revenue and profit, with demand for its graphic processors far outstripping supply as Big Tech scrambles to integrate AI applications into their products and services.

Despite the sharp increase in Nvidia's share price, the stock's forward earnings valuation has actually decreased due to the even sharper increases in analysts' earnings estimates. The company now trades at 37 times forward earnings, compared with 48 times earnings a year ago, according to LSEG data.

Nvidia's popularity extends beyond the stock market and into the derivatives market as well. The GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage change in Nvidia, is the largest single stock ETF. The fund recorded $1 billion in daily turnover for the first time ahead of Nvidia's results last week, and its total net assets have reached a record $2.82 billion this week, according to Lipper data.

Options traders are also bullish on Nvidia, with volumes, particularly for calls, increasing in recent sessions following the surge in its stock price. Thursday marked the fifth consecutive session where more than a million Nvidia call options changed hands, the longest such streak in the stock's history, according to a Reuters analysis of Trade Alert data.

As Nvidia continues to capitalize on the wave of AI adoption and innovation, it appears that the company is on the verge of making history by dethroning Apple as the world's second-most valuable company. With its cutting-edge technology and ability to seize the latest trends, Nvidia's future looks brighter than ever.