Nvidia set to overtake Apple as world's second-most valuable company

The tech world is witnessing a potential shift in the balance of power. Nvidia, the graphics processing unit (GPU) giant, is on track to dethrone Apple as the world's second-most valuable company, according to recent market analyses. This comes amidst a surge in demand for AI applications, which heavily rely on Nvidia's high-performance chips.

The story behind this potential upset lies in contrasting fortunes. Nvidia's stock price has skyrocketed nearly threefold in the past year, pushing its market capitalization close to $2.7 trillion.

This phenomenal growth is attributed to the booming demand for AI, a field where Nvidia's GPUs are the workhorses. From powering AI assistants like Siri and Alexa to training complex algorithms for self-driving cars and facial recognition, Nvidia's chips are at the heart of this technological revolution.

Meanwhile, Apple, the long-reigning king of consumer electronics, has faced headwinds. While still a dominant force, its stock price has experienced a slowdown, and it recently ceded its top spot to Microsoft. Analysts point to reduced demand for iPhones and growing competition in China as contributing factors.

Experts believe Nvidia's ability to ride multiple growth waves is a key factor in its success. The company initially thrived in the gaming market with its powerful graphics cards. Then, it capitalized on the cryptocurrency boom, as miners heavily utilized its processing units. Now, with the rise of AI, Nvidia finds itself perfectly positioned once again.

"It is certainly notable because Apple has been so dominant for so long, especially on the growth and innovation front. Recently though, Apple's innovation curve seems to have flattened, showing slower future growth," said Brian Mulberry, client portfolio manager at Zacks Investment Management.

"On the other hand, Nvidia has been able to catch wave upon wave of growth. Beginning with gaming demand, then crypto and now AI, they have been able to perfectly match innovation with demand and that equals explosive growth.”

This shift doesn't diminish Apple's immense brand loyalty and established product ecosystem. However, it highlights the dynamic nature of the tech industry. Companies that can adapt and cater to evolving technological needs are poised for significant growth.

Nvidia became the fastest company to grow from $1 trillion to $2 trillion in 2024 and, since then, the company has consistently breezed past Wall Street's lofty expectations for revenue and profit.