Nvidia briefly overtook Apple as the world’s most valuable company on Friday, hitting a market value of $3.53 trillion, fueled by unprecedented demand for its AI-optimized processors. Apple, now valued at $3.52 trillion, reclaimed its title by the day’s end, though Nvidia’s stock closed up 0.8%, driven by its growing role in the artificial intelligence sector.
Nvidia’s Market Surge and AI Dominance
The Silicon Valley-based chipmaker has become the go-to supplier for AI computing hardware, propelling it ahead of technology giants such as Microsoft and Apple at times this year. Nvidia’s position as a leader in AI was bolstered further when OpenAI, the company behind ChatGPT, announced a $6.6 billion funding round in October, a factor analysts see as crucial in maintaining demand for Nvidia’s products.
Since the beginning of October, Nvidia’s stock has risen by 18%, boosted by strong data center demand and positive earnings from semiconductor companies like Western Digital. TSMC, the world’s largest contract chipmaker, also reported a 54% profit increase last week, driven by high demand for AI-related chips, lending further optimism to Nvidia’s growth outlook.
Russ Mould, investment director at AJ Bell, noted that “more companies are now embracing artificial intelligence in their everyday tasks,” maintaining high demand for Nvidia’s processors. “As long as we avoid a big economic downturn in the United States, companies will likely continue to invest heavily in AI capabilities, providing a healthy tailwind for Nvidia,” Mould added.
Apple Faces Market Pressures Amid Tepid Demand
In contrast, Apple is facing slowing demand for its flagship iPhones, particularly in China, where its smartphone sales declined by 0.3% in the third quarter, while rival Huawei saw a 42% surge in sales. Apple is set to report its quarterly earnings on Thursday, with analysts forecasting a 5.5% increase in revenue to $94.5 billion. This is modest compared to Nvidia’s projected 82% year-over-year revenue growth to $32.9 billion, according to LSEG data.
Nvidia, Apple, and Microsoft collectively account for nearly a fifth of the S&P 500 index’s weight, significantly influencing the broader U.S. stock market and tech sector. Nvidia’s nearly 190% stock surge this year underscores investor optimism in AI’s transformative potential, pushing the S&P 500 to record highs and making Nvidia’s options among the most traded in recent months, per data from options analytics provider Trade Alert.
Sustaining Growth Amid Investor Caution
Despite Nvidia’s impressive growth, analysts warn of potential market corrections. “The question is whether Nvidia’s revenue stream will last long-term or is fueled more by investor sentiment than by durable growth in AI,” said Rick Meckler, partner at Cherry Lane Investments. While Nvidia’s immediate growth prospects appear solid, sustaining long-term gains may depend on validating the ongoing AI boom.
Nvidia’s explosive market success marks a pivotal moment in the tech sector, with investors closely watching to see if the company can maintain its competitive edge in the evolving AI landscape.
