NVIDIA Overtakes Apple in Market Value but Trades at a Discount
NVIDIA Corporation (NASDAQ:NVDA) has surpassed Apple Inc. (NASDAQ:AAPL) in market value, reaching a $5.77 trillion valuation compared to Apple’s $4.86 trillion. Despite this, investors are paying less for NVIDIA’s expected earnings, with a forward P/E ratio of 24.88 versus Apple’s 35.21. This discrepancy raises questions about why Apple commands a higher multiple, especially as NVIDIA’s earnings are projected to be significantly larger.
NVIDIA’s rapid growth is driven by its transformation into the backbone of the AI industry. The company is no longer just selling graphics processors but offering a comprehensive computing platform, including networking, CPUs, systems, and software like CUDA. This holistic approach has led to a substantial increase in revenue opportunities, with management projecting fiscal 2028 revenue to grow roughly 70%, limited only by supply constraints. NVIDIA’s customer base is also expanding beyond hyperscalers to include enterprises, governments, and AI startups.
Apple, on the other hand, benefits from a massive ecosystem of over 2.5 billion active devices, which supports its hardware, subscriptions, and services. Services generated $30.7 billion in the latest quarter, with over 1.5 billion paid subscriptions. However, Apple’s growth is slowing, with management expecting only 9% to 11% revenue growth in the September quarter. The company’s reliance on AI to drive future growth remains uncertain, as it continues to navigate higher memory costs and supply constraints.
At current valuations, NVIDIA appears to have the stronger position. While Apple offers stability and a mature business model, NVIDIA’s forward earnings multiple is more justified by its rapid growth and expanding AI infrastructure. The market seems to be demanding more from Apple, reflecting the higher risk associated with its valuation.