Nvidia poised to overtake Apple as 2nd most valuable company

Nvidia may soon surpass Apple as the world’s second-most valuable company, benefiting from the rapid adoption of AI applications. Nvidia’s high-end chips, essential for AI technologies like OpenAI’s ChatGPT, have driven its stock value to nearly triple over the past year, reaching $2.68 trillion.

Apple, facing weak iPhone demand and competition in China, recently lost its top market value spot to Microsoft and was last valued at $2.92 trillion. “Apple’s innovation curve has flattened, showing slower future growth,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “Conversely, Nvidia has perfectly matched innovation with demand, leading to explosive growth.”

Nvidia, heavily weighted on the S&P 500 and the Nasdaq, has been crucial in driving U.S. stocks to record highs, contributing over a third of the S&P 500’s gains this year. It became the fastest company to grow from $1 trillion to $2 trillion in 2024, surpassing Amazon, Google-parent Alphabet, and Saudi Aramco. Nvidia’s consistent performance, driven by high demand for its graphics processors, has exceeded Wall Street’s revenue and profit expectations.

Analysts’ sharp increases in earnings estimates have lowered the stock’s forward earnings valuation despite rising share prices. It traded at 37 times forward earnings, down from 48 times a year ago, according to LSEG data.

Nvidia is also popular in the derivatives market. The GraniteShares 2x Long NVDA Daily ETF, tracking twice Nvidia’s daily percentage change, hit $1 billion in daily turnover and set a record with $2.82 billion in net assets. Options traders remain bullish, with a significant increase in Nvidia call options trading.