Key points:
The stock price of Nvidia (Symbol: NVIDIA) has skyrocketed, with a jump in market cap of nearly $700 billion in May alone. Such growth has put Nvidia on track to become the second largest company in the world, closing in on Apple (Symbol: AAPL).
The market cap of Nvidia now stands at approximately $2.7 trillion, just 10% shy of Apple’s valuation at $2.95 trillion.
SEE: Images above show the NVIDIA rally, as observed on the VT Markets app.
The driving force behind this meteoric rise is its position as a leading player in artificial intelligence (AI). The company supplies AI-enabled chips to a roster of high-profile clients, including Microsoft (Symbol: MSFT), Tesla (Symbol: TSLA), Google (Symbol: GOOG) and OpenAI.
These partnerships have fueled the rapid expansion of Nvidia, as data centers increasingly rely on its technology to build the foundational layers of AI.
In contrast, Apple has been facing a monopoly lawsuit, casting a shadow over the company and limiting investor optimism.
Additionally, falling sales in China have hindered Apple’s growth prospects. Without a compelling AI narrative to captivate investors, the stock price of Apple has been lackluster, up just 3% for the year.
The stark contrast between Nvidia and Apple highlights the shifting dynamics in the tech sector.
The explosive growth of Nvidia reflects the increasing importance of AI in driving technological advancements and market valuations.
The stock price of Nvidia may continue to rise as AI demand grows and its client base expands. However, it is important to be cautious of potential market corrections and overvaluation risks. Traders may want to consider including Fibonacci retracement levels in technical analysis to keep the risk level manageable.
On the other hand, Apple may struggle to regain momentum unless it can address the challenges posed by the lawsuit and declining sales in China. Innovation in new product lines or AI initiatives could be pivotal for its recovery.
