Nvidia's (NASDAQ: NVDA) business has surged since the start of last year, fueled by a boom in artificial intelligence (AI). The company's years of expertise in graphics processing units (GPUs) gave it a head start over rivals Advanced Micro Devices and Intel in AI. These chips are crucial to developing AI models, thanks to their ability to perform multiple tasks simultaneously.
As a result, Nvidia's chip sales have skyrocketed, illustrated by a 524% jump in data center revenue since Jan. 1, 2023.
As earnings have risen, so has Nvidia's stock. Its share price climbed 763% since the beginning of last year, which has seen its market cap rise from $360 billion to over $3 trillion. This growth has allowed it to climb the ranks of the world's most valuable companies, with Nvidia taking the No. 2 spot just behind Apple (NASDAQ: AAPL).
Nvidia's meteoric rise begs the question: Will it surpass Apple in market cap, and if so, when? The chipmaker has consistently outperformed Apple in growth over the last decade, with its stock up more than 26,000% compared to Apple's 790% growth. Most of that growth began in 2023, when Nvidia's dominance in AI chips send the stock soaring.
As a result, Nvidia looks likely to steal Apple's crown as the world's most valuable company, and it could do it as soon as 2030. Here's why.
Nvidia's business exploded over the last 10 years, becoming a critical fixture in the chip market. The company initially made a name for itself in gaming as one of the first to begin selling GPUs to the consumer market. As a result, Nvidia's chips are now used by gamers worldwide to build high-performance gaming PCs.
The tech giant's success in gaming has allowed it to branch out to multiple other sectors. Nvidia's chips now power game consoles, data centers (which help run various cloud platforms), self-driving technology, robotics used in Amazon warehouses, laptops, and AI models, allowing investors to profit from multiple growth catalysts.
Data by YCharts
Nvidia's growth massively outpaced Apple's by several metrics since 2014. Even before a boom in AI, the chipmaker was on a trajectory to eventually surpass the iPhone company.
Nvidia's free cash flow reached $39 billion this year, significantly lower than Apple's $104 billion. However, Nvidia's free cash flow has increased by 125% over the last 12 months, while Apple's has risen by 5%. As a result, Nvidia's cash hoard is expanding rapidly and could eventually overtake Apple's, allowing it to grow its business more easily and widen its lead AI.
Apple is staunchly expanding its role in artificial intelligence this year, unleashing a wave of generative updates across its product lineup and releasing devices better suited for the heavy workloads required to run AI models. However, the company faces steep competition from fellow tech companies like Samsung, Microsoft, and Alphabet, each with competing AI products.
In smartphones alone, Apple was responsible for 15.8% of the market in the second quarter of 2024, a slight decrease from its 16% share in Q2 2023. The company lost out to rising Chinese brands like Xiaomi and OPPO. Meanwhile, in August, Alphabet's Pixel 9 smartphone debuted with AI features that could give Apple's coming iPhone 16 a run for its money.
Conversely, Nvidia accounts for an estimated 90% of all AI GPUs.AMD and Intel are working to catch up in the industry. However, Nvidia is unlikely to lose the top spot soon as a developer favorite with more financial resources than its peers. For reference, AMD's free cash flow reached just over $1 billion in 2024, while Intel's sunk to a negative $12 billion.
The AI market is expanding quickly, with companies increasingly needing powerful chips to offer the most cutting-edge products. Nvidia has an exciting opportunity to keep releasing improved chips annually, with dozens of AI-minded companies motivated to buy them to stay competitive.
As a result, Nvidia is positioned to keep seeing gains from the industry for years and could easily surpass Apple's market cap by the end of the decade. Consequently, it's worth considering Nvidia's stock now before it's too late.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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