Investing

Prediction: This Stock Will Beat NVIDIA as the First $4 Trillion Company

Joey Frenette

Published: January 3, 2025 7:16 am

Nvidia (NASDAQ:NVDA) was a standout performer last year, but with shares running out of steam in recent months, the AI chip giant seems to be slowing pace as mega-cap tech races to the $4 trillion market cap milestone. Indeed, it seemed like Nvidia would be the very first to hit a $4 trillion valuation as shares rocketed higher for most of last year. Though Apple (NASDAQ:AAPL) recently came within a hair of hitting the market, with a market cap just north of $3.9 trillion, the iPhone maker’s disastrous first day of 2025 (which saw shares of AAPL shed nearly 3% in a day) saw it take a few backward steps on a day that saw Nvidia surge 3%.

Indeed, it’s starting to become a close race that’s too close to call. As it stands today, Apple sports a $3.69 trillion market cap, while Nvidia boasts one that’s at $3.39 trillion. Though Apple is still in the lead, it’s become a seasonal habit for AAPL stock to limp and stumble in the first quarter of a new year, only to make up for lost time in the following three quarters. In the past five years, Apple has started the first quarter with a sell-off four times.

Apple stock limps into 2025 on a trio of concerning headlines. Don’t count it out as the race to $4 trillion heats up

With the exception of 2023, Apple stock doesn’t fare well to start the year, and with shares sinking rapidly following a handful of uninspiring news events (an analyst at UBS cut its estimates, a $95 million settlement hovering around accusations that Siri had been snooping and discounts on iPhones in China), it seems like Nvidia may have the second wind it needs to be minted the very first firm to sport a $4 trillion market cap.

Just because Apple stock is treading water on its first trading day does not mean the rest of the year will be a slog, especially if its Apple Intelligence offering improves by leaps and bounds from its current state in iOS 18.2. With iOS 19 on the way and the potential for upside AI surprises, it’s a mistake to discount Apple stock as it plunges off its recent highs. Though the race to $4 trillion has narrowed, I still think Apple will be the firm to win the race.

Indeed, Apple stock was overbought going into the festive season, making it overdue for a correction. Whether such a correction is over with remains the $4 trillion question. The recent note by UBS, which slashed its estimates over “soft iPhone sell-through,” Apple stock could stay stuck at $236, its current price target on the name, and a few dollars lower than where shares currently sit today at $243 and change per share.

So much for a supercycle!

So, where is that AI-induced iPhone supercycle that many folks on Wall Street were talking about a few months earlier? It may be postponed to later this year, at least according to DeepWater Asset Management’s Gene Munster.

In a prior piece, I highlighted Mr. Munster’s view that June 2025 could mark the start of the upgrade cycle. As to whether it’s new AI features unveiled through WWDC 2025 — which tends to happen in June — that act as the catalyst or something else entirely remains to be seen. I think there’s a good chance WWDC 2025 could pull the curtain on the real “interest drivers” of Apple Intelligence. In its current state, Apple Intelligence isn’t inspiring old phone holders to upgrade.

According to a recent survey of about 2,000 people, around 73% of iPhone users said AI features added little or no value.

As time goes on, look for this percentage point to go down, perhaps significantly, especially if Apple can stand taller with its AI ambitions in its second year of Apple Intelligence. Apple Intelligence will only get better from here, but as to whether it’ll get better fast enough to induce a 2025 iPhone upgrade cycle, though, remains to be seen.

The bottom line

I think Apple stock could be a major mover leading into its WWDC 2025 event, one that’s sure to be packed with more Apple Intelligence advancements. Though only time will tell, I do think the catalyst could help Apple become a $4 trillion company before Nvidia. Personally, I think an announcement of an “Apple-made LLM,” an Apple-made alternative to ChatGPT, could kick off that supercycle many analysts were chatting about in 2024.