24/7 Insights

• The market cap of Nvidia Corp. (NASDAQ: NVDA) may soon top that of Apple Inc. (NASDAQ: AAPL).
• The share price of the former is on the rise, while the prospects for the latter are uncertain.

It is hard to believe that Apple Inc. (NASDAQ: AAPL) is not the most valuable public company based on market cap. Microsoft Corp. (NASDAQ: MSFT) took that crown away last year. Microsoft had a large cloud business. Apple had the iPhone. The cloud business had a bright future. The iPhone was more in question. A similar situation has brought the market cap of Nvidia Corp. (NASDAQ: NVDA) an inch away from Apple’s. In this case, Nvidia is the dominant force in artificial intelligence (AI), which has been described as the most significant tech advance since the internet. Apple still has the iPhone, and not much more.

Apple’s market cap is $2.9 trillion, while Microsoft is well ahead at $3.2 trillion. Microsoft is making its own major push into AI, primarily through its agreement with OpenAI. Nvidia’s market cap has topped $2.8 trillion. And the market cap trend is very much in Nvidia’s favor. Its stock is up 120% this year. Apple’s is down 1%. Apple has no significant AI play.

Nvidia’s Advantage

Investors do not have to look further than earnings to see Nvidia’s advantage. In the most recently reported quarter, its revenue rose 262% year over year to $26 billion, and per-share earnings rose 629% to $5.98.

In the most recent quarter, Apple’s revenue dropped 4% to $90.8 billion. Earnings were flat at $1.53 a share. Perhaps most importantly, iPhone revenue fell from $51.3 billion to $46 billion. Apple has to rely on strong sales of the new iPhone 16 to recover. It is unclear whether it will have significantly advanced features that will get buyers to upgrade from the iPhone 15.

What could turn Apple around? The iPhone and iOS could have extraordinary AI features. The media reports that Apple is talking to Alphabet about an AI partnership. However, AI software is already available on many devices, and the new iPhone may not have upgrades that will distinguish it.

What could bring Nvidia’s market cap down? The primary reason is that Nvidia’s rapid rise in value has attracted dozens of small competitors. Rival AMD may produce chips that have better features, or it could undercut Nvidia’s product on price. Nvidia’s challenge is to keep its market share.

Right now, the market is betting that Nvidia can hold its own and that the iPhone cannot.

This Is How Much Money Nvidia Makes Every Minute

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