Nvidia and Microsoft Poised to Overtake Apple in Market Value

The stock market has witnessed significant fluctuations and reshuffling over the past year, with tech stocks gaining momentum due to the surge in artificial intelligence (AI). As a result, the Nasdaq Composite has soared by over 60% since the beginning of 2023. Apple, once the world’s most valuable company by market cap, temporarily lost its top position to Microsoft and Nvidia earlier this year. However, Apple has now reclaimed its throne with a market cap of $3.3 trillion. Nevertheless, Microsoft and Nvidia remain strong contenders and could potentially surpass Apple in the coming years.

Nvidia, with a market cap of $2.6 trillion, has experienced remarkable growth, outperforming Apple in stock growth over the past five years. Its share price has risen by an impressive 2,600%, compared to Apple’s 330% increase. Nvidia’s success can be attributed to the soaring demand for its graphics processing units (GPUs), which power various products, including cloud platforms, AI models, personal computers, and game development engines. With an estimated market share of 70% to 95% in GPUs, Nvidia’s dominance in the chip market positions it favorably for future growth.

On the other hand, Apple has faced challenges in attracting new customers to its products, with a decline in iPhone and Mac revenue. The company aims to expand in AI with the upcoming launch of Apple Intelligence, a major software update. While this update may boost earnings in the short term, the long-term profitability of Apple’s AI endeavors remains uncertain. In contrast, Microsoft’s diversified business model and established position in AI, along with its potent software offerings, make it a formidable competitor. The AI market is projected to grow significantly, and Microsoft’s ability to monetize its AI products through various brands like Windows, Office, Azure, Bing, Xbox, and LinkedIn gives it an advantage.

Microsoft’s share price has outperformed Apple’s in 2024, with a 12% increase compared to Apple’s 8%. The company’s head start in AI, coupled with its strong presence in software, positions it well for continued success. Microsoft has introduced generative features across its product lineup, including productivity tools, a revamped Bing, and multiple AI solutions on its cloud platform Azure. The company’s investments in AI have started to pay off, attracting new members to Azure and Microsoft 365, resulting in year-over-year sales growth.