Nvidia may surpass Apple as the world's second-most valuable company due to a boost from AI applications
Nvidia's stock value has surged to $2.68 trillion due to high demand for its chips in AI applications, potentially enabling it to overtake Apple as the world's second-most valuable company. Apple, valued at $2.92 trillion, ceded the top spot to Microsoft, primarily due to weak iPhone demand
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Jun 4, 2024
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Nvidia is poised to surpass Apple as the world's second-most valuable company, benefiting from the widespread adoption of AI applications. The reliance on Nvidia's high-end chips for virtually all AI applications, including OpenAI's ChatGPT, has propelled its stock value to nearly triple over the past year, reaching $2.68 trillion. Meanwhile, Apple, once the largest Wall Street firm by market value, has faced challenges with weakening demand for iPhones and intense competition in China, leading to its valuation dropping to $2.92 trillion and ceding the top spot to Microsoft earlier this year.
Brian Mulberry of Zacks Investment Management contrasts Apple's stagnant innovation with Nvidia's remarkable growth fueled by gaming, crypto, and AI. Nvidia's pivotal role in driving record highs in U.S. stock indices and its unprecedented achievement of reaching a $2 trillion valuation in 2024 solidifies its market dominance, surpassing tech giants like Amazon and Alphabet. Despite supply challenges, Nvidia consistently exceeds Wall Street expectations, driven by soaring demand for its graphic processors amidst the integration of AI applications by Big Tech. The decrease in Nvidia's forward earnings valuation reflects analysts' confidence in its sustained growth, highlighting its position as a leading force in technological innovation and market performance.
Nvidia's popularity extends to the derivatives market, with the GraniteShares 2x Long NVDA Daily ETF being the largest single-stock ETF, tracking twice the daily percentage change in Nvidia. The ETF experienced a significant milestone, reaching $1 billion in daily turnover for the first time ahead of Nvidia's recent results, with total net assets reaching a record $2.82 billion. Options traders are notably bullish on Nvidia, evident in the increased volume of call options traded in recent sessions, reflecting optimism surrounding the surge in Nvidia's stock price. Thursday marked the fifth consecutive session where more than a million Nvidia call options were exchanged, marking the longest streak in the stock's history, according to Reuters analysis of Trade Alert data.
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