Nvidia has overtaken Apple in market capitalisation, emerging as the world’s second-largest stock. This development places Nvidia just behind Microsoft, now making it the second most valuable company globally.
As of the latest valuation, Nvidia’s worth has soared to $3.006 trillion, narrowly edging out Apple, which stands at $3.005 trillion. Microsoft maintains its lead with a market cap of $3.146 trillion. On 31 May, projections indicated that Nvidia would surpass Apple, a prediction that has now come to fruition.
Nvidia, a leader in AI chip technology, has benefited immensely from the surge in demand for artificial intelligence applications. The company’s high-end chips are integral to the functioning of AI technologies like OpenAI’s ChatGPT, contributing to a nearly threefold increase in Nvidia’s stock value over the past year, now at $3.006 trillion.
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In contrast, Apple has faced challenges, relinquishing its top spot to Microsoft earlier this year. The tech giant is grappling with waning demand for its iPhones and intense competition in China, with its valuation recently recorded at $2.92 trillion.
“This is significant because Apple has long been dominant, particularly in growth and innovation,” remarked Brian Mulberry, client portfolio manager at Zacks Investment Management. “However, Apple’s innovation seems to have plateaued, indicating slower future growth. Nvidia, conversely, has consistently ridden waves of growth—from gaming demand to cryptocurrency and now AI—effectively aligning innovation with market demand, leading to explosive growth.”
In 2024, Nvidia also achieved the distinction of being the fastest company to grow from a $1 trillion to a $2 trillion valuation, outpacing giants like Amazon, Alphabet (Google’s parent company), and Saudi Aramco.
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Since its remarkable forecast about a year ago, Nvidia has continually exceeded Wall Street’s high expectations for revenue and profit. The demand for its graphics processors has far surpassed supply as major tech companies race to integrate AI into their applications.
Analysts have sharply increased their earnings estimates, causing a decrease in the stock’s forward earnings valuation despite the rising share price. Currently, Nvidia trades at 37 times forward earnings, compared to 48 times earnings a year ago, according to LSEG data.
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Nvidia is also a favourite in the derivatives market. The GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage change in Nvidia’s stock, 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, with total net assets reaching a record $2.82 billion, as per Lipper data.
Options traders remain optimistic, with a noticeable increase in volumes, particularly for call options, following the recent surge in Nvidia’s stock price. Thursday marked the fifth consecutive session with over a million Nvidia call options traded, the longest such streak in the company’s history, based on a Reuters analysis of Trade Alert data.
