Nvidia, a key player in the AI revolution, is on track to potentially overtake Apple as the world's second-most valuable company. Nvidia's high-end chips, integral to AI applications like OpenAI's ChatGPT, have driven the company's stock value to soar nearly threefold over the past year, reaching $2.72 trillion.
Apple, once the undisputed leader on Wall Street, recently lost its top position to Microsoft amid declining iPhone demand and stiff competition in China. Apple's current valuation stands at $2.93 trillion.
Brian Mulberry, client portfolio manager at Zacks Investment Management, commented on the shift: "Apple has been dominant for so long, particularly in growth and innovation. However, its innovation curve appears to have flattened. Conversely, Nvidia has capitalized on successive waves of growth—from gaming and cryptocurrency to AI—aligning innovation with demand, resulting in explosive growth."
Nvidia's impact on the market is significant, heavily influencing the S&P 500 and Nasdaq indices. The company's growth has been a major driver of record highs in U.S. stocks, contributing to more than a third of the S&P 500's gains this year. In 2024, Nvidia became the fastest company to grow from $1 trillion to $2 trillion in value, outpacing giants like Amazon, Alphabet, and Saudi Aramco.
Since its remarkable forecast about a year ago, Nvidia has consistently exceeded Wall Street's expectations for revenue and profit. The demand for its graphic processors continues to surpass supply as major tech companies rush to integrate AI applications.
Analysts have sharply increased their earnings estimates for Nvidia, leading to a lower forward earnings valuation despite rising share prices. The stock traded at 37 times forward earnings, down from 48 times a year ago, according to LSEG data.
Nvidia is also a favorite in the derivatives market. The GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage change in Nvidia's stock, has become the largest single-stock ETF. It recorded $1 billion in daily turnover for the first time last week, with total net assets reaching a record $2.82 billion this week, according to Lipper data.
Options traders remain bullish on Nvidia, with a surge in call option volumes following the stock price increase. Thursday marked the fifth consecutive session where over a million Nvidia call options were traded, the longest streak in the company's history, according to a Reuters analysis of Trade Alert data.
