Nvidia's AI boost could soon make it the second-most valuable company behind Microsoft

Nvidia could overtake Apple to become the world’s second-most valuable company soon thanks to the boost it has received from AI. Nvidia hardware largely powers OpenAI’s ChatGPT software and that is in widespread use by third-party AI applications; this demand is benefiting Nvidia and increasing its value.

According to Google Finance, Apple has a market cap of $2.95 trillion whereas Nvidia’s market cap is $2.7 trillion. Reuters explains that Nvidia is still benefiting from the AI boom but Apple is currently struggling with weak iPhone demand and significant competition in China.

Providing analysis of the matter to Reuters, Brian Mulberry, client portfolio manager at Zacks Investment Management, said:

“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. 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.”

What could help Nvidia overtake Apple is the speed at which its stock price is rising. Nvidia became the fastest company to grow from $1 trillion to $2 trillion in 2024, flying past Amazon, Alphabet (Google), and oil firm Saudi Aramco.

The stock has also been doing so well that it has been propping up the S&P 500, masking the difficulties other companies are facing with the impacts of higher interest rates.

With innovations coming out all the time in generative AI, we could continue to see Nvidia do well, as long as these applications continue to rely on Nvidia hardware. There is still loads of potential for AI, such as third-party companies adopting them to enhance their products.

What will be interesting to see is how well Nvidia holds up when interest rates start to come down. After rates were lowered around the time of the Great Recession, the stock market corrected (fell) harshly.

Source: Reuters | Image via Depositphotos.com

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