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Nvidia nears Apple in market cap as AI dominance drives growth 

June 4, 2024

Key points: 

  • The market cap of Nvidia surged by $700 billion in May, now valued at $2.7 trillion. 
  • Apple faces challenges with a monopoly lawsuit and declining sales in China. 
  • AI dominance drives the rapid growth in Nvidia, bringing in major clients like Microsoft, Tesla and Google. 

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. 

Chart displaying Nvidia's stock performance with a notable upward trend, closing at 1141.67, highlighting its rapid market cap growth nearing Apple's due to its dominance in AI technology. The chart features moving averages and MACD indicators, reflecting strong investor confidence. Hosted at VT Markets, a forex CFDs brokerage

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. 

Lots of trouble going on for Apple 

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. 

Same sector, different dynamics 

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.

Opportunities and risks in the tech sector 

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.

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