Nvidia Potentially Joins Apple As The Second Largest Company In The World

Nvidia, has the potential to become the second largest company in the world (photo: x @nvidia)

JAKARTA - Nvidia is likely to surpass Apple soon to become the second-largest company in the world. This comes as the biggest benefit of a surge in adoption of artificial intelligence apps that beat iPhone makers, who have been the largest Wall Street company according to market value for years.

The dependence of almost all artificial intelligence applications such as OpenAI's ChatGPT on Nvidia's high-quality chips has helped the shares nearly triple their value in the past year to 2.68 trillion US dollars.

In contrast, Apple handed over its number 1 position to Microsoft earlier this year due to weak demand for its iPhone and intense competition in China. The company last valued at USD 2.92 trillion.

"This must be striking because Apple has been so dominant for so long, especially in growth and innovation. Recently, however, Apple's innovation curve seems to be sloping, showing slower future growth," said Brian Mulberry, client portfolio manager at Zack's Investment Management.

"On the other hand, Nvidia has managed to capture the wave of growth after growth. Starting from gaming demand, then crypto, and now AI, they have succeeded in equating innovation with demand and that means exploding growth," Mulberry added.

The semiconductor company has a huge weight in S&P 500 and Nasdaq and has been key in pushing US shares to record highs. This accounts for more than a third of this year's S&P 500 increase.

Nvidia is also the fastest growing company from 1 trillion to 2 trillion US dollars in 2024, surpassing Amazon.com, Google, and Saudi Aramco.

Since the usual extraordinary forecasts about a year ago, the company has consistently surpassed Wall Street's expectations for revenue and profit, with demand for its graphics processor far exceeding supply as Big Tech raced to embed artificial intelligence applications.

The sharp increase in analyst revenue forecasts has resulted in a decline in share profit valuation, even with higher share prices.

This is trading at 37 times the profit going forward, compared to 48 times the profit a year ago, according to LSEG data.

Nvidia is also popular in the derivative market. GraniteShares' daily ETF 2x Long NVDA, which tracks two changes to Nvidia's daily percentage, is the largest single-stake ETF.

The funds recorded a daily turnover of $1 billion for the first time before Nvidia's results last week and total net assets have hit a record $2.82 billion this week, according to Lipper data.

Traders are optimistic because Nvidia's volume, especially for calls, has increased in the final session following its stock price hike.

Thursday marked five consecutive sessions in which more than a million call options Nvidia changed hands, to the longest series in stock history, according to a Reuters analysis of Trade Alert data.