The $5 Trillion Club: Which Is the Better Stock to Own, Apple or Nvidia?

Two global tech titans, Apple (AAPL) and Nvidia (NVDA), have reached the $5 trillion market cap threshold. While both are outstanding companies, which one offers a more advantageous long-term investment opportunity? Nvidia appears to have greater upside potential, but it also entails greater risk compared to Apple. Let us examine the two companies.

Nvidia has demonstrated remarkable growth among the largest technology firms over the past five years. In the fiscal year 2023, it achieved nearly $27 billion in revenue, with analysts forecasting a staggering $412 billion in revenue for fiscal 2027 – a remarkable 15-fold increase from a solid foundation. Analysts predict a further 70% revenue growth in the subsequent fiscal year.

This surge in revenue is driven by the growing demand for AI infrastructure and Nvidia's GPUs, which are the primary chips used for AI workloads. The company's CUDA software platform provides a strong moat for AI model training, as most original AI code was developed within this ecosystem. Moreover, Nvidia has strategically positioned itself for the next stages of AI.

By acquiring Groq and its language processing unit (LPU) technology, Nvidia has strengthened its capabilities in the inference market, which is growing faster than the training market and is expected to become the larger market in the future. Nvidia's development of Arm-based central processing units (CPUs) also holds significant importance with the rise of agentic AI.

Coupled with its extensive networking portfolio, Nvidia now offers comprehensive AI factories tailored to various AI tasks, such as training, inference, and AI agents. Apple, while not experiencing the same level of revenue growth as Nvidia, boasts a highly loyal customer base that compounds over time, leading to significant earnings-per-share (EPS) growth.

Over the past five years, Apple's EPS has grown from $6.11 in fiscal 2022 to a projected $8.83 this fiscal year, representing a 45% increase despite only a 21% rise in revenue. The iPhone remains the company's primary product, contributing around half of its overall revenue and 70% of its product revenue. Smartphones and other devices exhibit typical replacement cycles, providing Apple with a recurring revenue stream on the hardware side.

Furthermore, Apple's ability to attract an affluent customer base that remains loyal to its ecosystem and generates high-margin service revenue from services like Google Search, cloud storage, app and subscription commissions, and Apple Pay transactions sets it apart. While Nvidia is the more affordable stock with higher growth potential, carrying higher risk, Apple's ecosystem and loyal customer base make it a compelling choice for investors seeking stability and long-term growth.