PwC, one of the leading accounting firms, estimates that artificial intelligence (AI) could contribute an incredible $15.7 trillion to the global economy each year by 2030. This kind of economic boost is rare and suggests that AI has transformative possibilities comparable to the rise of the internet.

As a key player in driving this AI revolution, Nvidia (NASDAQ: NVDA) has secured a large portion of this expanding market. Since the AI surge began in late 2022, Nvidia has gained over $3 trillion in market capitalization, currently hovering just under $3.4 trillion, making it only about $190 billion away from surpassing Apple (at $3.57 trillion) to claim the title of the most valuable company globally.

Is it possible for Nvidia to outdo the iPhone maker?

Nvidia’s Blackwell chips are significant

Nvidia’s leadership in the tech industry mainly stems from its advanced technology. The company’s chips consistently outperform competitors in speed and efficiency, earning Nvidia approximately 90% market share. In the last quarter alone, Nvidia’s AI chip market generated net income roughly 25 times that of its nearest competitor, Advanced Micro Devices.

Nvidia realizes that this lead is precarious and is eager to maintain its advantage. The company has pledged to refresh its chips annually (instead of the typical 2-3 years), a challenging commitment. Currently, its Hopper chips are selling exceptionally well—Elon Musk recently ordered 100,000 of them for the fastest supercomputer—but the new Blackwell chips are set to launch shortly.

CEO Jensen Huang indicates that the demand for the new chips is “insane,” with some reports suggesting they are completely sold out for the next year. Nvidia is ramping up production by teaming up with Foxconn to establish the largest Blackwell manufacturing facility in Mexico. Analysts from Morgan Stanley even anticipate that Blackwell could generate an additional $10 billion in revenue before the close of this year. While this projection exceeds Nvidia’s own estimates and should be viewed cautiously, it underscores the strong demand for the product. The true challenge lies in how many chips Nvidia can produce and deliver.

Apple faces challenges

Apple is expanding, especially in its services division, and Wall Street appears optimistic. However, there are concerns over disappointing sales of its latest iPhone model. Reports indicate that sales could be declining in China, a crucial market, and domestically, the company is relying on new AI features – dubbed Apple Intelligence – which necessitate newer iPhone models to encourage upgrades and increase sales. It remains uncertain if these enhancements will sufficiently entice consumers to upgrade.

The upcoming earnings report later this month will provide valuable insights into Apple’s performance. We can only hope the company has improved iPhone sales while continuing to capitalize on its services segment, including Apple TV, Apple Music, and the Apple Store.

Nvidia likely to take the lead

Given the anticipated rollout of Nvidia’s Blackwell chips and the solid demand echoing last year’s trends that fueled impressive sales growth, I believe Nvidia’s stock will rise more quickly than Apple’s, ultimately allowing it to secure the top spot for market capitalization.

price-to-earnings ratios (P/E)

NVDA PE Ratio data by YCharts

Nvidia’s stock is presently valued at a premium, which is crucial for potential investors to consider. This high valuation implies that investors are expecting significant growth. If Nvidia fails to sustain its remarkable growth rate, its stock value might decrease. So far, it seems that growth is continuing, which may necessitate a different approach to evaluate the stock’s potential.

Johnny Rice has no positions in any of the mentioned stocks. The Motley Fool holds positions in and endorses Advanced Micro Devices, Apple, and Nvidia. The Motley Fool maintains a disclosure policy.

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