In its latest fiscal second quarter of 2027, Nvidia (NASDAQ:NVDA) reported a net income of $59.7 billion, nearly double Apple's (NASDAQ:AAPL) $29.8 billion in its fiscal third quarter of 2026. This stark contrast highlights Nvidia's rapid growth, as its earnings were only about 13% higher than Apple's in the same quarter a year prior. Despite this significant profit advantage, Nvidia's market value is only about 20% higher than Apple's, with a market cap of roughly $5.8 trillion compared to Apple's $4.9 trillion.
The gap in market valuation suggests that investors may be cautious about the sustainability of Nvidia's earnings, which surged 126% year over year. Nvidia's profits are heavily reliant on data center sales, primarily AI chips, which accounted for $89.0 billion of its $96.2 billion in revenue last quarter. In contrast, Apple's earnings are more diversified and stable, supported by services like the App Store and iCloud, which provide steady revenue streams.
Apple's net income dropped only around 3% in fiscal 2023, while Nvidia's fell 55% to $4.4 billion in its fiscal 2023. This volatility in Nvidia's earnings may contribute to the market's more cautious valuation. Despite this, Nvidia's stock trades at a lower price-to-earnings ratio than Apple's, suggesting that the market may already account for some risk in its valuation.
Analysts suggest that Nvidia's stock price could withstand a significant drop in earnings without its market valuation becoming disproportionately low compared to Apple's. This indicates that investors see potential in Nvidia's long-term growth, particularly in the AI sector, despite the current volatility in its profits.