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With the iPhone maker, which has long held the title of largest Wall Street firm by market value, facing competition from Nvidia, which stands to gain the most from the adoption of AI applications, Nvidia may soon overtake Apple to become the second most valuable corporation in the world.
Nearly all artificial intelligence apps, like ChatGPT from OpenAI, rely on Nvidia’s high-end hardware, which has contributed to the stock’s nearly threefold increase in value to $2.68 trillion over the last year.
On the other hand, Apple lost the top rank to Microsoft earlier this year as the formerly successful business struggles with China’s fierce competition and the lacklustre demand for its iPhones. It was worth $2.92 trillion at the time.
“Considering how long Apple has dominated the market, particularly in terms of growth and innovation, it is undoubtedly noteworthy. But as of late, it appears like Apple’s innovation curve has flattened down, indicating slower growth going forward, according to Brian Mulberry, client portfolio manager at Zacks Investment Management.
However, Nvidia has been able to keep up with the constant growth waves. They have been able to precisely match innovation with demand, which has led to tremendous growth, starting with the desire for games and continuing with cryptocurrency and AI.”
The semiconductor company has played a key role in propelling U.S. stocks to all-time highs and is highly weighted on the Nasdaq and S&P 500. Over one-third of the gains made by the S&P 500 this year can be attributed to it.
Along with becoming the fastest-growing corporation from $1 trillion to $2 trillion in 2024, Nvidia surpassed Saudi Aramco, Amazon.com, and Alphabet, the parent company of Google.
With demand for its graphic processors far exceeding supply as Big Tech hurries to embed AI applications, the business has routinely blown past Wall Street’s high expectations for revenue and earnings since its blowout projection roughly a year ago.
Despite the stock price rocketing higher, sharp rises in analysts’ earnings projections have caused a decline in the firm’s forward earnings value.
According to LSEG statistics, it traded at 37 times anticipated earnings as opposed to 48 times earnings a year earlier.
In the derivatives market, Nvidia is likewise well-liked. The largest single stock ETF is GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage move in Nvidia.
In front of Nvidia’s results last week, the fund had a $1 billion daily turnover for the first time. This week, its total net assets reached a record $2.82 billion, according Lipper statistics.
Given that Nvidia’s volumes have increased recently, especially for calls, following the spike, options traders are optimistic.
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