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Nvidia Market Cap Closing in on $3.5 Trillion: Will It Surpass Apple Soon? | The Motley Fool
Can Nvidia's Blackwell chips propel it past Apple to become the world's most valuable company? $15.7 trillion. That's how much PwC, one of the "big four" accounting firms, believes artificial intelligence (AI) could add to the global economy annually by 2030. That sort of boost doesn't come along very often. The technology has true revolutionary potential that we probably haven't seen since the introduction of the internet. As the company helping drive this AI revolution like no other, Nvidia (NVDA 0.78%) has already captured a significant share of that growing market. Since the AI boom took off in late 2022, the company has added more than $3 trillion in market capitalization, currently sitting just shy of $3.4 trillion and only $190 billion or so from overtaking Apple (currently at $3.57 trillion) as the most valuable company in the world. Can it pull ahead of the iPhone maker? Nvidia's dominance in its industry is due largely to its superior technology. The company's chips are consistently faster and more efficient than what its competitors have to offer, which has led to its control of roughly 90% of the market. It means that last quarter, Nvidia's net income from its AI chip market was roughly 25 times that of its closest competitor, Advanced Micro Devices. Nvidia knows this advantage is fragile, and it must do everything it can to maintain its edge. To do this, it has committed to updating its chips every year (rather than every 2-3 years), which is a tall order to be sure. At present, the company's current Hopper chips are still selling like hotcakes -- Elon Musk ordered 100,000 of them not long ago to build the world's fastest supercomputer -- but Nvidia's new Blackwell chips will begin shipping soon. CEO Jensen Huang says demand for the new chips is "insane," and, according to some reports, they are already sold out for the next 12 months. Nvidia is attempting to expand production, partnering with Foxconn to build the world's largest Blackwell production facility in Mexico. Incredibly, analysts at Morgan Stanley project that Blackwell could bring in $10 billion in added revenue before this year ends. That is much higher than the company's own guidance, so take this forecast with a grain of salt, but it's clear that demand is very strong. We'll see how many chips the company can actually ship. Apple is growing, especially in its services segment, and Wall Street seems relatively bullish. However, reports of less-than-stellar sales of its latest iPhone model are cause for concern. There are indications that sales may have slipped in China, a key market, and at home, the company is banking on its AI integrations -- called Apple Intelligence -- which require a newer iPhone to spur upgrades and boost sales. The jury is still out on whether the changes will be impressive enough for consumers to justify an upgrade. We'll learn a lot in the company's upcoming earnings release later this month. Hopefully, the company has been able to improve its iPhone sales while continuing to take advantage of its service segment, which includes things like Apple TV, Apple Music, and the Apple Store. Given Nvidia's Blackwell roll-out and credible reports of demand echoing the demand from last year that spurred its incredible sales growth, I think Nvidia's share price will rise faster than Apple's, and it will take the lead position in the race for world's largest market cap. However, there is a wrinkle here. The valuations of the two stocks need to be factored in. Take a look at this chart showing the two companies' price-to-earnings ratios (P/E). Nvidia stock trades at quite a premium, and that needs to be kept in mind. With a valuation like that, investors expect major growth. If Nvidia can't maintain its outsized growth rate, its stock price may come back down to earth. So far, it doesn't look like that growth will slow anytime soon, and since Nvidia is in high-growth mode, a different metric may be needed to gauge the stock's potential. The PEG ratio -- a company's PE divided by its expected growth rate -- attempts to account for growth and is a better metric here. Conventional wisdom suggests that stocks with a PEG ratio of 1 or lower are trading at a discount. Nvidia's PEG ratio is 1.1 while Apple's is 2.4, suggesting Nvidia is the bargain here. If Nvidia continues growing as it has, its high PE is easily justified, and Apple will struggle to hold the No. 1 position.
[2]
Nvidia market cap closing in on $3.5 trillion: Will it surpass Apple soon?
The stock market is volatile and unpredictable. Here's why stock prices move and how to navigate it as an investor. $15.7 trillion. That's how much PwC, one of the "big four" accounting firms, believes artificial intelligence (AI) could add to the global economy annually by 2030. That sort of boost doesn't come along very often. The technology has true revolutionary potential that we probably haven't seen since the introduction of the internet. As the company helping drive this AI revolution like no other, Nvidia (NASDAQ: NVDA) has already captured a significant share of that growing market. Since the AI boom took off in late 2022, the company has added more than $3 trillion in market capitalization, currently sitting just shy of $3.4 trillion and only $190 billion or so from overtaking Apple (currently at $3.57 trillion) as the most valuable company in the world. Nvidia's dominance in its industry is due largely to its superior technology. The company's chips are consistently faster and more efficient than what its competitors have to offer, which has led to its control of roughly 90% of the market. It means that last quarter, Nvidia's net income from its AI chip market was roughly 25 times that of its closest competitor, Advanced Micro Devices. Nvidia knows this advantage is fragile, and it must do everything it can to maintain its edge. To do this, it has committed to updating its chips every year (rather than every 2-3 years), which is a tall order to be sure. At present, the company's current Hopper chips are still selling like hotcakes - Elon Musk ordered 100,000 of them not long ago to build the world's fastest supercomputer - but Nvidia's new Blackwell chips will begin shipping soon. CEO Jensen Huang says demand for the new chips is "insane," and, according to some reports, they are already sold out for the next 12 months. Nvidia is attempting to expand production, partnering with Foxconn to build the world's largest Blackwell production facility in Mexico. Incredibly, analysts at Morgan Stanley project that Blackwell could bring in $10 billion in added revenue before this year ends. That is much higher than the company's own guidance, so take this forecast with a grain of salt, but it's clear that demand is very strong. We'll see how many chips the company can actually ship. Apple is having some growing pains Apple is growing, especially in its services segment, and Wall Street seems relatively bullish. However, reports of less-than-stellar sales of its latest iPhone model are cause for concern. There are indications that sales may have slipped in China, a key market, and at home, the company is banking on its AI integrations - called Apple Intelligence - which require a newer iPhone to spur upgrades and boost sales. The jury is still out on whether the changes will be impressive enough for consumers to justify an upgrade. We'll learn a lot in the company's upcoming earnings release later this month. Hopefully, the company has been able to improve its iPhone sales while continuing to take advantage of its service segment, which includes things like Apple TV, Apple Music, and the Apple Store. Nvidia will pull ahead Given Nvidia's Blackwell roll-out and credible reports of demand echoing the demand from last year that spurred its incredible sales growth, I think Nvidia's share price will rise faster than Apple's, and it will take the lead position in the race for world's largest market cap. Nvidia stock trades at quite a premium, and that needs to be kept in mind. With a valuation like that, investors expect major growth. If Nvidia can't maintain its outsized growth rate, its stock price may come back down to earth. So far, it doesn't look like that growth will slow anytime soon, and since Nvidia is in high-growth mode, a different metric may be needed to gauge the stock's potential. The PEG ratio - a company's PE divided by its expected growth rate - attempts to account for growth and is a better metric here. Conventional wisdom suggests that stocks with a PEG ratio of 1 or lower are trading at a discount. Nvidia's PEG ratio is 1.1 while Apple's is 2.4, suggesting Nvidia is the bargain here. If Nvidia continues growing as it has, its high PE is easily justified, and Apple will struggle to hold the No. 1 position. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. Don't miss this second chance at a potentially lucrative opportunity Offer from the Motley Fool: Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a "Double Down" stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Right now, we're issuing "Double Down" alerts for three incredible companies, and there may not be another chance like this anytime soon.
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Nvidia's market capitalization is approaching $3.5 trillion, potentially overtaking Apple as the world's most valuable company. This growth is driven by Nvidia's dominance in the AI chip market and the anticipated success of its new Blackwell chips.
Nvidia, the leading force in the artificial intelligence (AI) revolution, is on the verge of becoming the world's most valuable company. With a market capitalization approaching $3.4 trillion, Nvidia is now just $190 billion shy of overtaking Apple's $3.57 trillion valuation [1][2]. This meteoric rise is largely attributed to the company's dominance in the AI chip market, where it controls approximately 90% of the market share.
The AI industry is projected to add $15.7 trillion to the global economy annually by 2030, according to PwC [1]. Nvidia has positioned itself at the forefront of this technological revolution, with its net income from AI chips last quarter being roughly 25 times that of its closest competitor, Advanced Micro Devices [1].
Nvidia's success stems from its superior chip technology, consistently outperforming competitors in speed and efficiency. To maintain this advantage, the company has committed to annual chip updates, a significant acceleration from the industry standard of 2-3 years [1][2].
Nvidia's upcoming Blackwell chips are generating significant buzz in the industry:
While Apple continues to grow, particularly in its services segment, it faces challenges:
Despite Nvidia's higher price-to-earnings ratio, the PEG ratio (which accounts for growth) suggests Nvidia may be the better value:
This indicates that if Nvidia maintains its growth trajectory, it could justify its high valuation and potentially surpass Apple as the world's most valuable company in the near future.
Nvidia's stock reaches unprecedented levels due to surging demand for AI chips, positioning the company to potentially overtake Apple as the world's most valuable company.
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Nvidia, the AI chip leader, is at the center of speculation about its future valuation. Some investors believe it could reach $50 trillion, while others are more cautious. This story examines the various perspectives and factors influencing Nvidia's potential growth.
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James Anderson, a prominent tech investor, predicts Nvidia could reach a $50 trillion market cap. This forecast has sparked discussions about the company's future in AI and its current market performance.
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