Investing

Will Nvidia Be More Valuable Than Apple?

Douglas A. McIntyre

Published: March 9, 2024 8:48 am

The Motley Fool recently asked whether Nvidia’s (NASDAQ: NVDA) market cap will eventually be higher than Apple’s (NASDAQ: AAPL). A recent sell-off in Nvidia shares makes this unlikely to happen soon. However, the long-term trends of the two stock prices make it fairly likely.

For most of the last several years, Apple has had the largest market cap of US companies. In June 2023, it became the first public corporation worth over $3 trillion.

The surge in expectations about AI adoption has driven Nvidia shares higher by 270% in the last year. Apple’s, by comparison, is up only 11%, well below the 29% increase in the S&P 500.  Nvidia’s stock could be going much higher.

At this point, Nvidia’s market cap is $2.19 trillion. Apple’s is $2.64 trillion. If Apple’s stock drifts lower, those two figures could cross the year. When each company announces earnings next, it could happen faster. There is a school of thought that Apple will disappoint.

The chance that Nvidia will be worth more than Apple is more about iPhone sales than AI chip sales. AI chip demand may be partially “baked in” to Nvidia’s success. It is harder to say that a very sharp drop in iPhone sales is what the market sees as a reason for an Apple share price collapse.

However, iPhone sales could collapse. Data from China show that iPhone sales in the world’s largest smartphone market dropped 24% in the first six weeks of 2024. Apple’s China revenue fell in its most recently reported quarter, so some drop in iPhone unit sales in China might be expected. The 24% drop was a shock.

The iPhone’s future is largely based on the upgrades people make each time a new generation of iPhones is introduced, which usually happens in September. Most of the upgrades noticeable to consumers are the camera, chips, and, occasionally, battery life increase. Apple’s near-term financial future hinges on the number of people who upgrade to the iPhone 16 later this year.