Nvidia is on the brink of surpassing Apple to become the world’s second-most valuable company.
This shift is driven by the surge in adoption of AI applications, with Nvidia being a major beneficiary due to the heavy reliance of AI tools like OpenAI’s ChatGPT on its high-end chips.
Over the past year, Nvidia’s stock has nearly tripled, reaching a market value of $2.68 trillion.
Meanwhile, Apple lost its top spot to Microsoft earlier this year as it faces declining demand for iPhones and stiff competition in China. Apple’s market value recently stood at $2.92 trillion.
“It is certainly notable because Apple has been so dominant for so long, especially on the growth and innovation front.
“Recently though, Apple’s innovation curve seems to have flattened, showing slower future growth,” said Brian Mulberry, client portfolio manager at Zacks Investment Management.
“On the other hand, Nvidia has been able to catch wave upon wave of growth.
“Beginning with gaming demand, then crypto and now AI, they have been able to perfectly match innovation with demand and that equals explosive growth.”
Nvidia’s impact on the stock market is substantial. It is a significant component of both the S&P 500 and the Nasdaq, contributing more than a third of the S&P 500’s gains this year.
The company also became the fastest to grow from $1 trillion to $2 trillion in 2024, outpacing Amazon, Alphabet, and Saudi Aramco.
Since forecasting impressive growth about a year ago, Nvidia has consistently exceeded Wall Street’s expectations for revenue and profit, driven by high demand for its graphics processors amid Big Tech’s AI push.
Despite rising share prices, its forward earnings valuation has decreased, trading at 37 times forward earnings compared to 48 times a year ago, according to LSEG data.
Nvidia’s popularity extends to the derivatives market.
The GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage change in Nvidia, has become the largest single stock ETF.
It achieved $1 billion in daily turnover and its total net assets hit a record $2.82 billion this week, according to Lipper data.
Options traders are optimistic, with Nvidia’s call options volume spiking recently.
For five consecutive sessions, over a million Nvidia call options were traded daily, marking the longest streak in the stock’s history, according to a Reuters analysis of Trade Alert data.