Nvidia could soon pass Apple as the world’s most valuable company. While Nvidia — which grew 122% in the second quarter — has been the tip of the generative AI spear since 2023, Apple — whose top line increased 4.9% in Q2 — still scrambles for AI relevance.
It may not be long before Nvidia’s superior innovation skills — which I described in my book, Brain Rush — could help propel the AI chip designer’s stock market capitalization ahead of Apple’s.
Nvidia appears poised to surpass Apple’s market cap as soon as next month. How so? Were Nvidia and Apple shares to keep rising at their respective 187% and 25% rates so far this year, the AI chip designer’s stock market capitalization would surpass Apple’s current $3.52 trillion next month — reaching $3.92 trillion, according to my estimates.
Nvidia stock could keep rising. Were the stock to sustain its 187% growth for the next year (to Apple’s 25%), I estimate the AI chip designer could be worth $9.7 trillion by next October — more than twice Apple’s $4.4 trillion.
Here are the forces that could propel Nvidia’s rise:
- Strong demand for Nvidia’s Blackwell chip.
- Nvidia’s dominant share of the generative AI chip market.
- Nvidia customers boosting their capital expenditures.
- Nvidia’s innovation excellence.
To be sure, Nvidia does face headwinds. Its revenue growth rate — while high — is decelerating from 122% in Q2 to 8o% this quarter, according to my September Forbes post, companies are struggling to make AI payoff, noted the Boston Globe, and conflict in Taiwan could make it challenging for Nvidia’s manufacturing partner to produce chips.
However, analysts are increasingly optimistic about Nvidia’s future potential. If you already own Nvidia, hold on. If not, there could be plenty of upside ahead.
Strong Demand For Nvidia’s Blackwell Chip
Nvidia got my attention in May 2023 after forecasting shockingly fast revenue growth during the company’s second quarter report. Since then Nvidia’s market capitalization has way more than doubled — adding more than $2.4 trillion in the past 17 months.
Cloud service providers’ demand for Nvidia’s graphics processing units — driven by their desire to build and deploy AI chatbots — spurred me to write Brain Rush.
While Nvidia’s revenue has “more than doubled in each of the past five quarters — and at least tripled in three of those periods,” according to CNBC, analysts expect the company’s expansion to slow to about 82% — yielding $32.9 billion revenue for the quarter ending in October, according to London Stock Exchange Group.
Nvidia has continued to push the edge of the GPU envelope — most recently launching the Blackwell chip. Microsoft, Meta, Google and Amazon are among the companies purchasing Nvidia’s GPUs “in massive quantities to build large clusters of computers for AI,” according to CNBC.
Nvidia CEO Jensen Huang recently described demand for Blackwell — the company’s next-generation AI GPU — as “insane” and the company “expects billions of dollars in revenue from the new product in the fourth quarter,” noted CFO Collette Kress, according to TheStreet.
Nvidia’s Dominant Share Of Generative AI Training And Inference Market
The market for chips to build and operate AI chatbots is accelerating. Earlier this month, Advanced Micro Devices estimated the market for these AI accelerators was growing even faster than the company estimated last year.
AMD estimated the market could reach $500 billion by 2028, a 25% increase from the company’s prior forecast — representing 62% compound annual growth from 2023 when the market was valued at $45 billion, noted TheStreet.
Nvidia controls a huge portion of that market. Analysts at Mizuho estimate Nvidia controls a whopping 95% of the market, CNBC reported. Why is Nvidia leading? “Nvidia benefits from its chip performance lead, strong scaling capabilities, and large installed base, which supports enterprises with multicloud strategies,” noted Citigroup analyst Atif Malik, according to TheStreet.
Nvidia Customers Boosting Their Capital Expenditures
As customers invest more capital in systems to build AI models, Nvidia’s share of that capital is rising.
Recent events have made large companies more sanguine about investing in generative AI. OpenAI recently released an AI model with reasoning capabilities and Alphabet is also working on such a model. Moreover, Microsoft is expected to boost capital expenditures by about 33% to $58 billion, according to Bloomberg.
Moreover, Nvidia’s recent optimism about Blackwell has relieved concerns for some investors, “There had been questions about the impact production delays could have, so these updates are reassuring,” Zehrid Osmani, portfolio manager at Martin Currie Investment Management, told Bloomberg.
Indeed Blackwell orders are solid. Orders for the new chips “are booked out 12 months or so,” with “every indication that business remains robust with very high forward visibility,” noted Morgan Stanley analysts who met with management, according to Bloomberg.
Reasoning-based AI could be a large new product category for Nvidia. “when you consider how compute-intensive it is, this could be a huge new product category,” said John Belton, a portfolio manager at Gabelli Funds, Bloomberg noted.
Therefore, Nvidia could capture a larger share of cloud services providers’ capital expenditures. By selling both its legacy Hopper GPUs and its new Blackwell platform, Nvidia’s share of that capital spending could grow.
How so? Malik estimates Nvidia GPUs will grow 118% in 2024 and 84% in 2025 — giving the company 31% of all capital spending from U.S. cloud providers in 2024 and about a 35% share in 2025, TheStreet wrote.
Demand for AI chips could continue as rivals fear being left behind. Companies building AI chatbots face “a Prisoner’s Dilemma — each is individually incentivized to continue spending, as the costs of not doing so are devastating,” TD Cowen analysts wrote in an October 13 report, reported Reuters.
Nvidia’s Innovation Excellence
Nvidia’s success is a result of innovation excellence. The company earns higher margins than rivals because its chips work better, it has the best engineers, its R&D results in a plethora of innovations, and its software for chip developers is unrivaled, according to my September Forbes post.
Deploying those innovation skills, Nvidia will continue to upgrade its AI accelerators annually. In 2025, the company plans to announce its Blackwell Ultra chip and Rubin, a next-generation platform, in 2026, CNBC reported.
What could go wrong for Nvidia? With such high investor expectations, Nvidia stock could plunge if the company does not beat revenue targets for the third quarter and raise guidance when the company reports next month. Global conflict in Taiwan could make it difficult for TSMC, Nvidia’s manufacturing partner, to produce chips as Yahoo! Finance noted.
Such concerns did not stop one analyst from raising his price target for Nvidia to $150. On October 14, Goldman Sachs analyst Toshiya Hari, raised his price target for Nvidia by $15 arguing Nvidia would “likely benefit from the increasing complexity of AI workloads,” according to TheStreet.