Apple (NASDAQ: AAPL) is rapidly closing the gap with Nvidia (NASDAQ: NVDA) as the world's largest company, with a valuation nearing $5 trillion compared to Nvidia's just under $5.5 trillion. Despite Apple's recent success, analysts argue that Nvidia's growth trajectory, driven by artificial intelligence (AI), will likely keep it ahead. Nvidia's revenue grew by 106% in its last quarter, far outpacing Apple's 16% growth, and the company expects 70% revenue growth next year.
Apple's valuation has surged due to its relatively cautious approach to AI investments, with capital expenditures totaling just $10 billion over the past year. This has made it a popular choice for investors looking to avoid the high spending of AI-focused companies. However, Nvidia's valuation remains lower, trading at 29 times earnings compared to Apple's 31 times earnings, despite its explosive growth.
Analysts believe Nvidia's stock does not fully reflect its projected growth, trading at just 14 times next year's earnings. If Nvidia meets its growth targets and its stock rises to a more typical valuation, it could double in value, further distancing itself from Apple. The article also notes that while Nvidia is a strong pick, other stocks may offer even greater returns, highlighting the importance of diversified investments.
The Motley Fool Stock Advisor team has identified 10 stocks they believe are better buys than Nvidia, emphasizing the potential for significant returns from other investments. Despite this, Nvidia's AI-driven growth is expected to keep it ahead of Apple in the coming years.