Nvidia Surpasses Apple and Alphabet as Market Cap Leader
Nvidia's massive growth rate has catapulted it to the top of the market cap rankings, surpassing Apple and Alphabet. The company's GPU computing units are in high demand due to artificial intelligence (AI) needs, with hyperscalers spending hundreds of billions on data center capital expenditures this year.
According to Nvidia's estimates, the big five will spend nearly $800 billion on data center capital expenditures this year alone, and that figure is projected to rise to $1.3 trillion next year. This has led to a 70% revenue growth guidance for Nvidia next year, making it one of the fastest-growing companies in the world.
Alphabet, which is also investing heavily in AI, has seen huge success with its AI platform and is seamlessly integrating AI overviews into Google Search to maintain its position as the top internet search tool. However, Apple's growth case is less certain due to rising component prices, particularly in memory chips, and a lack of headway on AI products.
Nvidia's stock looks undervalued compared to Apple and Alphabet, with a premium valuation that doesn't make sense given its expected slower growth rate next year. When using the operating price-to-earnings (P/E) ratio, Nvidia's valuation is significantly lower than both Apple and Alphabet.