The Silicon Valley tech giant is reaching a new level in the market, driven by demand for its advanced artificial intelligence technology and strong financial performance.
Nvidia’s market capitalization rose to $3.4 trillion by mid-morning, surpassing Apple ($3.35 trillion) as the most valuable public company on the planet.
Nvidia shares rose 2% , while Apple shares fell 1% on Monday, following Friday’s 2% rise for Nvidia and 1% decline for Apple.
The boost for Nvidia came after its announcement Friday afternoon that it will replace Intel on the blue-chip Dow Jones Industrial Average index (the change will take effect on Friday), while Apple shares were hit by disclosure of a major new sale of Apple shares by one of its largest shareholders, Warren Buffett-led Berkshire Hathaway .
Context to take into account
Nvidia briefly surpassed Apple as the world’s largest company on Oct. 25, but has not ended a trading session as the largest firm since June.
The company designs about 75% of the world’s AI accelerators , a key semiconductor technology that powers generative AI applications such as OpenAI’s ChatGPT chatbot . The technology responds to growing demand for graphics processing units (GPUs) produced by Nvidia.
This “unbridled” demand has translated into a massive increase in profits and a boom in the stock market. Nvidia’s net profits have risen from $2.3 billion in the first half of 2022 to $31.5 billion in the first half of 2024, and its share price has increased by 850% in the past two years.
However, Nvidia shares are down 4.8% from their all-time closing high on Oct. 21, while Apple shares are down 6.7 % over the same period, explaining the shift in their market values.
In its earnings report Thursday, Apple beat Wall Street expectations for revenue and adjusted profit, but its weaker outlook for the final quarter of 2024 disappointed investors.
The surprising fact
Apple’s financial performance remains much stronger than Nvidia’s, with revenue projected at $397 billion and net profit of $98 billion , well above Nvidia’s estimated sales of $120 billion and net profit of $64 billion , according to FactSet data that combines average results and forecasts.
However, analysts expect Nvidia’s growth trajectory to continue, with earnings projected at $122 billion by 2026, just shy of Apple’s projected $124 billion .
