Apple Joins Nvidia in the $5 Trillion Club. Here's Which Stock I Think Can Get to $10 Trillion First.
One company serves corporations in a cyclical, increasingly competitive business environment. The other serves consumers who are loyal regardless of the economic backdrop.
In late 2022, Nvidia (NVDA) became the first company to reach a $5 trillion market capitalization, followed by Apple (AAPL) just last week. Although Nvidia is currently technically bigger, with a market cap of $5.13 trillion, Apple's recent gains have put it in the same league. The question arises: which of these two tech giants is more likely to reach a $10 trillion valuation first?
Nvidia's future growth prospects are promising, as it continues to be a key player in computing technology, including artificial intelligence. However, its shares are currently priced at a relatively low valuation of 14 times next year's expected per-share profit of $15.91. This could be due to competition from other AI computing companies like Advanced Micro Devices and Qualcomm, which may negatively impact Nvidia's AI business.
Despite this, Apple is also an artificial intelligence company, but not in the same way as Nvidia. While Apple's iPhone and iOS offer AI-based solutions, these features are part of a larger, more enjoyable user experience. Most iPhone users, who make up about half of Apple's sales, simply prefer the overall experience of the device. This consumer loyalty has been a key driver of Apple's past success, present growth, and future projections.
Apple's market-beating performance can be attributed to its status as a lifestyle brand that has fostered enormous loyalty from a reliable and predictable consumer market. Consumer Intelligence Research Partners reports that 87% of current iPhone owners plan to purchase another iPhone for their next smartphone, explaining the ongoing growth in the number of Apple-made devices actively used worldwide. With 2.5 billion iPhones in use as of early this year, Apple's future growth potential remains strong.
In conclusion, while it's uncertain which company will reach the $10 trillion valuation first, both Nvidia and Apple are strong growth investments that can perform exceptionally well in the future.
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