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Will Nvidia Soon Overtake Apple to Become the Second-Most Valuable Company Globally?

Updated: Jun 27

Nvidia

Nvidia, known for its powerful computer chips, might soon become the world's second-most valuable company, overtaking Apple. Apple has been a leading company on Wall Street for many years because of its popular iPhone, but now it faces challenges like reduced product demand and strong competition in China.


Nvidia's chips are essential for many artificial intelligence (AI) applications, including those from OpenAI, like ChatGPT. This demand has helped Nvidia's stock value almost triple in the past year, reaching $2.72 trillion. Meanwhile, Apple's value has dropped slightly to $2.93 trillion.


Brian Mulberry from Zacks Investment Management noted that while Apple has been a leader in innovation, its pace of introducing new and innovative products has slowed down recently. On the other hand, Nvidia has been rapidly growing, boosted by the increasing need for its chips in gaming, cryptocurrency, and AI, leading to its explosive growth.


Nvidia has also significantly influenced the U.S. stock market, contributing to record highs in major stock indices like the S&P 500 and the Nasdaq. It has been particularly successful this year, being responsible for a large part of the gains in the S&P 500.


Nvidia was the quickest company to increase its value from $1 trillion to $2 trillion in 2024, faster than other major companies like Amazon, Google, and Saudi Aramco. It has consistently exceeded Wall Street's expectations for sales and profits due to high demand for its graphics processors, which are in short supply.


Despite its rapid growth, Nvidia's stocks are currently more affordable compared to last year, based on expected earnings. Additionally, Nvidia is popular in the financial markets, especially among those trading in stock options and ETFs, indicating a strong belief in its continued growth. Recently, options trading for Nvidia has been very active, showing a lot of optimism about its future performance.


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Key Points

  1. Nvidia's Rising Valuation: Nvidia's stock has nearly tripled in value over the past year, bringing its market valuation close to $2.72 trillion, potentially surpassing Apple as the world's second-most valuable company. This growth is largely driven by the high demand for Nvidia's chips, which are crucial for AI applications.

  2. Challenges for Apple: Apple, traditionally a leader in innovation and market value, has experienced a slowdown in demand for its iPhones and faces increased competition, particularly in China. This has resulted in Apple losing its top spot to Microsoft and now potentially being overtaken by Nvidia in market valuation.

  3. Market Influence and Performance: Nvidia has significantly impacted the U.S. stock market, contributing to record highs in major indices like the S&P 500 and the Nasdaq. It also set a record as the fastest company to grow from $1 trillion to $2 trillion in market value in 2024, demonstrating robust financial performance and market confidence.



FAQs

Q1. What does Nvidia do?

Nvidia is a company that designs special types of computer chips. These chips are used to play video games, create digital currencies like Bitcoin, and run artificial intelligence applications like ChatGPT. Their technology is very important for many industries today.


Q2. Why has Nvidia's stock price increased so much?

Over the last year, the value of Nvidia's stock has almost tripled, reaching a market valuation of about $2.72 trillion. This increase is mostly because their chips are in high demand for AI technology, which is becoming more and more popular and necessary in various technologies.


Q3. How might Nvidia become the most valuable company?

Nvidia might soon be worth more than Apple because it plays a crucial role in developing AI technologies, which are very important right now. While Nvidia is growing fast due to the demand for its technology, Apple has been facing problems like fewer people buying iPhones and tough competition in places like China.


Q4. What problems is Apple currently facing?

Apple, known for its iPhones and computers, is struggling a bit lately. Fewer people are buying iPhones, and companies in China are giving Apple a hard time, competing strongly against it. This has caused Apple's growth to slow down and its market value to decrease.


Q5. Why are Nvidia's chips so popular?

Nvidia's chips are in high demand because they are crucial for running AI applications. As more companies and technologies rely on AI, they need Nvidia's chips to make everything work. This demand has helped Nvidia grow very quickly.


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