Nvidia could become the second most valuable company in the world as they are potentially on the brink of overtaking Apple. Once the company surpasses tech-giant Apple, they will only trail Microsoft. Microsoft and Nvidia historically worked together to develop OpenAI, more commonly known as ChatGPT.
Nvidia has had unbelievable growth over the last few years with their development of OpenAI, and now they will seemingly continue to see the company rise through the ranks. Notably, Apple appears to have hit a wall in growth, failing to add as much value as in recent years.
“It is certainly notable because Apple has been so dominant for so long, especially on the growth and innovation front. Recently though, Apple’s innovation curve seems to have flattened, showing slower future growth,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “On the other hand, Nvidia has been able to catch wave upon wave of growth. Beginning with gaming demand, then crypto and now AI, they have been able to perfectly match innovation with demand and that equals explosive growth.”
The rise of Nvidia emphasizes how important it is to the IT industry. The semiconductor giant has played a significant role in propelling U.S. equities to all-time highs and is a major constituent of the Nasdaq and S&P 500 indices. This year, the S&P 500 has gained more than one-third of its value just from Nvidia alone.
Interestingly, Nvidia surpassed well-known companies like Amazon, Google parent Alphabet, and Saudi Aramco to become the fastest-growing corporation in terms of market valuation, rising from $1 trillion to $2 trillion. Due to the unwavering demand for its graphic chips, Nvidia has consistently outperformed revenue and profit projections, fueling this explosive expansion.
Since approximately one year ago, Nvidia has consistently outperformed Wall Street’s high expectations. The steep increase in analysts’ earnings projections, which is a reflection of this success, has led to a decline in the forward earnings value of the company. Based on LSEG data, Nvidia is currently trading at 37 times projected profits, down from 48 times earnings a year ago.
Nvidia’s appeal in the futures market surpasses that of ordinary equities. The largest single stock ETF is the GraniteShares 2x Long NVDA Daily ETF, which follows twice the daily percentage move in Nvidia. According to Lipper statistics, this fund recently achieved a record-breaking $1 billion in daily turnover ahead of Nvidia’s earnings release. Its total net assets also reached a record $2.82 billion.
A bullish mood among options traders has also been demonstrated by the large increase in call option volumes that followed the stock’s price spike. Significantly, according to a Reuters review of Trade Alert data, Thursday was the sixth straight session that more than a million Nvidia call options were traded, the longest run of that kind of activity in the history of the company.
The IT sector is dynamic, as demonstrated by Nvidia’s quick growth trajectory and strategic location at the forefront of AI innovation. The company’s market worth is poised to threaten long-standing tech heavyweights as it continues to push improvements in AI, therefore changing the competitive environment.
