Nvidia, the dominant supplier of chips, just made history by surpassing Apple in market value to become the second most valuable company in the world, second only to Microsoft. The achievement reflects the enormous economic potential of artificial intelligence.
Although Nvidia’s lead was temporary and Apple has regained second place, the two companies are now very close in value and have been swapping positions.
Why this matters. Nvidia has become a major player in the AI era by being the leading supplier of specialized chips that power this technology.
Nvidia’s near-monopoly position allows it to capture the majority of the value generated by the rapid growth of generative AI. Its market capitalization is a strong indicator of AI’s disruptive impact and the expectations it continues to generate for the future.
The data behind this historic event. On Wednesday, Nvidia reached a value of $3.01 billion, surpassing Apple’s $3 billion.
- Its stock price hit an all-time high of $1,221.
- On Friday, Nvidia will enact a 1:10 split to make it easier for small investors to access its stock.
- So far this year, Nvidia has seen a 153.4% increase in value.
- Apple has only seen a 5.8% increase.
The power of AI. The swap in positions show two opposing trends in the current landscape. On one hand, Nvidia is experiencing an unstoppable rise due to the explosion of generative AI, even as a fabless company, or a company that designs chips but doesn't have its own factories. Its revenues and profits have been soaring and breaking records for several quarters.
On the other hand, Apple is experiencing a slowdown in business, as shown in its latest annual results, despite its privileged position. As such, the iPhone maker is likely contemplating strategies to reignite growth.
The future. In fiscal year 2025, analysts project Nvidia’s revenue to be around $110 billion with a share price target of $1,342 before the split.
Nvidia’s future prospects are tied to an investment in AI, not just a financial one. Similar to how Apple represents the smartphone era, Nvidia aspires to rule the artificial intelligence world.
With the stock market already surpassing the $3 trillion mark, attention is now turning to new challenges, such as reaching the $5 and potentially even the $10 trillion mark.
Image | Nvidia | Xataka using Midjourney
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