AI pioneer Nvidia may soon overtake Apple as the world’s second-most valuable company.
Most artificial intelligence applications, including OpenAI’s ChatGPT, depend on Nvidia’s high-end CPUs, helping the stock nearly triple in value to $2.72 trillion in a year.
As iPhone demand drops and competition in China increases, Apple lost its top spot to Microsoft (MSFT.O) earlier this year. Its last value was $2.93 trillion.
“It is significant because Apple has long dominated growth and innovation. Recently, however, Apple’s innovation curve appears to have flattened, indicating slower future growth,” said Brian Mulberry, client portfolio manager at Zacks Investment Management.
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“On the other side, Nvidia has managed to catch wave after wave of growth. Starting with gaming demand, then crypto, and now AI, they’ve been able to precisely match innovation with need, resulting in tremendous development.”
The semiconductor company is heavily weighted on the S&P 500 and the Nasdaq and has played a key role in propelling US stocks to historic highs. It accounted for more than one-third of the S&P 500’s gains this year.
Apple Phone – Images from pixabay stevepb
Nvidia also became the fastest firm to expand from $1 trillion to $2 trillion in 2024, surpassing Amazon.com, Google’s parent Alphabet , and Saudi Aramco.
Since its explosive estimate around a year ago, the business has routinely exceeded Wall Street’s ambitious revenue and profit expectations, with demand for its graphic processors greatly outstripping supply as Big Tech rushes to implant AI applications.
Sharp rises in experts’ earnings projections have resulted in a decline in the stock’s forward earnings value, despite the share price’s rapid rise.
According to LSEG statistics, it traded at 37 times anticipated earnings, down from 48 times earnings the previous year.
Nvidia is also widely used in the derivatives market. GraniteShares 2x Long NVDA Daily ETF which tracks twice the daily percentage change in Nvidia, is the largest single-stock ETF.
The fund achieved $1 billion in daily turnover for the first time ahead of Nvidia’s results last week, and its total net assets reached a new high of $2.82 billion this week, according to Lipper statistics.
Options traders are bullish, as Nvidia’s volumes, particularly for calls, have increased in recent sessions following the stock price jump.
Thursday marked the sixth consecutive session in which more than a million Nvidia call options changed hands, the longest such streak in the stock’s history, according to a Reuters examination of Trade Alert data.
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