Nvidia is poised to overtake Apple as the world’s second-most valuable company, driven by the booming demand for AI applications. The company’s high-end chips, essential for AI tools like OpenAI’s ChatGPT, have propelled Nvidia’s market value to $2.68 trillion.
Meanwhile, Apple has lost its top spot to Microsoft this year, grappling with declining iPhone demand and competitive pressures in China, now valued at $2.92 trillion. Brian Mulberry of Zacks Investment Management commented on the shift, noting, “Apple’s innovation curve has flattened, indicating slower future growth, while Nvidia has capitalized on successive growth opportunities from gaming, crypto, and now AI.”
Nvidia’s impact on the S&P 500 and Nasdaq is significant, contributing over a third of the S&P 500’s gains this year. The company achieved record growth, reaching $2 trillion faster than peers like Amazon, Google-parent Alphabet, and Saudi Aramco.
Over the past year, Nvidia has consistently exceeded Wall Street’s high expectations for revenue and profit. This demand surge for its graphics processors, essential for AI, has outpaced supply, prompting a rally in its stock price. Despite the sharp rise in share price, Nvidia’s forward earnings valuation has decreased, trading at 37 times forward earnings, down from 48 times a year ago, according to LSEG data.
In the derivatives market, Nvidia remains a favourite. The GraniteShares 2x Long NVDA Daily ETF, which aims to double the daily percentage change in Nvidia’s stock, saw its daily turnover hit $1 billion for the first time last week. This ETF’s total net assets reached $2.82 billion this week, per Lipper data.
Options traders are also showing optimism in Nvidia’s prospects, with a notable increase in call option volumes, marking a historical peak in trading activity for the stock, according to Trade Alert data analyzed by Reuters.
