Nvidia Set to Surpass Apple as Second-Most Valuable Company

Nvidia is on the brink of overtaking Apple to become the world's second-most valuable company, thanks to its growing importance in the AI industry. This shift could push Apple, a longtime market leader, further down the rankings.

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Nvidia's advanced chips, crucial for AI tools like OpenAI's ChatGPT, have caused its stock value to almost triple in the past year, reaching $2.72 trillion. Meanwhile, Apple has faced declining iPhone sales and tough competition in China, causing it to fall behind Microsoft earlier this year. Apple's current value stands at $2.93 trillion.

"Apple has been a leader in innovation for a long time, but recently, its pace has slowed," said Brian Mulberry, a portfolio manager at Zacks Investment Management. "In contrast, Nvidia has successfully capitalized on several growth opportunities, from gaming to cryptocurrency and now AI, leading to rapid growth."

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Nvidia's success has significantly impacted the S&P 500 and Nasdaq indexes, helping drive U.S. stocks to record highs. The company's value surged from $1 trillion to $2 trillion faster than Amazon, Google’s parent company Alphabet, or Saudi Aramco.

Over the past year, Nvidia has consistently exceeded Wall Street's high expectations for revenue and profit. The demand for its graphics processors has been so high that supply can’t keep up, as many tech companies rush to use AI technologies.

Despite its rising stock price, Nvidia's forward earnings valuation has decreased. It now trades at 37 times forward earnings, compared to 48 times a year ago, according to LSEG data.

Nvidia is also popular in the derivatives market. The GraniteShares 2x Long NVDA Daily ETF, which tracks twice the daily percentage change in Nvidia's stock, has become the largest single-stock ETF. This fund saw $1 billion in daily turnover for the first time last week, with total net assets reaching a record $2.82 billion, according to Lipper data.

Options traders are very optimistic about Nvidia, with a significant increase in trading volumes, especially for call options. Last Thursday marked the fifth consecutive session with over a million Nvidia call options traded, the longest streak in the company’s history, based on a Reuters analysis of Trade Alert data.

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