Nvidia (NASDAQ:NVDA) is poised to shove Apple to become the world’s second-most valuable company. This change shows how Wall Street’s dynamics are changing as the AI powerhouse challenges the iPhone maker’s long-standing dominance.
The surging demand for Nvidia’s high-end chips, which are very needed for almost all artificial intelligence applications including OpenAI’s ChatGPT, has tripled the company’s stock value over the past year, reaching $2.72 trillion.
Apple, on the other hand, lost its top spot to Microsoft earlier in the year because of less demand for iPhones and tough competition in China. Its market capitalization is now $2.93 trillion.
Brian Mulberry, a client portfolio manager at Zacks Investment Management, stated that Nvidia’s rise is because it is still able to make new things and take advantage of new markets. Apple’s growth, on the other hand, may have reached a slow point.
Nvidia’s influence goes beyond its market value; the chip maker has a lot of power over the S&P 500 and Nasdaq indices, and it has helped push U.S. stocks to record highs. Nvidia has been the cause of more than a third of the S&P 500’s rise this year.
In 2024, Nvidia went from being worth $1 trillion to $2 trillion quicker than any other company, beating out tech giants like Amazon, Google-parent Alphabet, and Saudi Aramco.
Nvidia has kept beating Wall Street’s projections for revenue and profits, which has been helped by the continued high demand for its graphics processors as big tech companies quickly take up AI technologies.
Even though analysts have raised their earnings estimates up a lot, Nvidia’s forward earnings valuation has come down a bit. It is now trading at 37 times forward earnings, down from 48 times earnings a year ago.
The company’s popularity is also seen in the derivatives market. The GraniteShares 2x Long NVDA Daily ETF, which follows the daily percentage change in Nvidia’s stock price multiplied by two, is now the largest single stock ETF.
Options traders are bullish on Nvidia, and call volumes have gone up in recent trading sessions as the stock has trended higher. Thursday was the fifth day in a row that over a million Nvidia call options were traded, which shows how much investors are interested in the company’s future.