New Delhi: Nvidia is close to becoming the world’s second-most valuable company, driven by the increasing use of AI technology. Apple’s value dropped to $2.92 trillion because of weak demand for its iPhones, losing the top spot to Microsoft. Meanwhile, Nvidia’s stock has tripled in value to $2.68 trillion due to high demand for its AI-focused chips.
Nvidia’s potential to overtake Apple comes from its crucial role in AI, with its high-end chips powering many AI applications like OpenAI’s ChatGPT. This surge in demand has significantly increased Nvidia’s stock value over the past year, bringing it near Apple’s market value.
Apple, which used to be the top company by market value, is now facing slower iPhone sales and stronger competition in China, bringing its value down to $2.92 trillion. Brian Mulberry from Zacks Investment Management said that Apple’s innovation has slowed, leading to slower growth. On the other hand, Nvidia has continuously matched its innovations with market needs, from gaming and cryptocurrency to AI, resulting in strong growth.
Nvidia’s impact on the S&P 500 and Nasdaq has been significant, contributing greatly to the S&P 500’s gains this year. Nvidia also set a record by becoming the fastest company to grow from $1 trillion to $2 trillion in 2024, surpassing companies like Amazon, Google’s parent Alphabet, and Saudi Aramco.
Nvidia has consistently exceeded Wall Street’s expectations for revenue and profit over the past year, with demand for its graphic processors far outstripping supply as big tech companies rush to integrate AI. Analysts have increased their earnings estimates, leading to a drop in the stock’s forward earnings valuation even as its share price rises. Nvidia now trades at 37 times forward earnings, down from 48 times a year ago, according to some official reports.
Nvidia is also popular in the derivatives market, the GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage change in Nvidia’s stock, has become the largest single-stock ETF. This fund recently hit a daily turnover of $1 billion, and its total net assets reached a record $2.82 billion, according to Lipper data. Options trading volumes, especially for call options, have surged, with more than a million Nvidia call options traded for five consecutive sessions, marking a historic streak according to Reuters’ analysis of Trade Alert data.
