The "AI total leader" is approaching Apple step by step, can Nvidia take away the throne of "TOP 2 in market capitalization"?

Finance Associated Press

2024-06-01 10:37Published on the official account of Cailianpress, a subsidiary of Shanghai Poster Industry Group

Finance Associated Press, June 1 (edited by Huang Junzhi) Driven by the artificial intelligence (AI) boom, the share price of Nvidia, the biggest beneficiary, has soared, and now it seems that it may soon surpass Apple to become the world's second highest market capitalization company, which is still relatively backward in the field of artificial intelligence.

Nearly all AI applications, such as OpenAI's ChatGPT, rely on Nvidia's high-end chips, which has nearly doubled the company's stock price in the past year and now has a market capitalization of $2.70 trillion, just $250 billion short of Apple.

Although the stock's rally suffered a series of "shocks" in the second half of the week, with a slight pullback from the all-time high set earlier this week, it is not impossible to snatch the "TOP 2" throne from Apple, given that its status as the "total AI leader" is not in vain.

Wall Street analysts have also made no secret of their bullishness on Nvidia. I/O Fund technology analyst Beth Kindig said a few days ago that the stock's rally is far from over. She expects Nvidia's share price to soar 258% from current levels by 2030, reaching a market capitalization of $10 trillion by 2030, thanks to its impregnable moat.

By contrast, Apple relinquished its "top 1 market capitalization" position to Microsoft earlier this year, and the once-glamorous company is grappling with weak iPhone demand and fierce competition in the Chinese market. Its market capitalization today is $2.95 trillion, second only to Microsoft's $3.09 trillion.

Brian Mulberry, Client Portfolio Manager at Zacks Investment Management, said: "This is certainly noteworthy as Apple has been dominant for a long time, especially when it comes to growth and innovation. But recently, Apple's innovation curve seems to have flattened, showing a slowdown in future growth. ”

"Nvidia, on the other hand, was able to capture wave after wave of growth. Starting with gaming demand, then cryptocurrency, and now artificial intelligence, they have been able to perfectly match innovation with demand, which equals explosive growth. He added.

The semiconductor company is heavily weighted in the S&P 500 and Nasdaq indices and has played a key role in driving the U.S. stock market to record new highs. More than a third of the S&P 500's gains this year have come from Nvidia.

Apple's turnaround

Of course, Apple is not without a chance of winning, although until now, the company has not achieved much in the field of AI, and it is clearly behind other tech giants. But Apple's upcoming Worldwide Developers Conference (WWDC) on June 10 is Apple's first turnaround, according to Dan Ives, a well-known strategist at the U.S. investment bank Wedbush.

According to Ives, WWDC is "the most important event of a decade" as Apple prepares to release a series of AI products.

"In our view, bringing AI to its all-important developer community and laying the groundwork for bringing generative AI to consumers starts with Apple." He added that he also expects Apple to announce a partnership with OpenAI.

Apple's second turnaround is, of course, the upcoming iPhone 16.

Ives said all of these features could be integrated into the upcoming iPhone 16 release in September, which could trigger a "resurgence of growth" as more people upgrade their iPhones. He predicts that the iPhone upgrade cycle could exceed 270 million units.

In addition, Steve Eisman, the prototype of the movie "The Big Short", also sees Apple as a potential winner of the AI boom. He explained that in the long run, Apple will become a key hub for AI-led software, giving its products huge room for growth.

"It was clear to me that when all these apps came along, I needed a new phone, a new iPad, and a new laptop. So, when these apps come along, the biggest beneficiary is probably Apple. He said.

BofA pointed out that mobile phones will require more computing power to handle the daily use of AI applications, which means the best "replacement" opportunity for mobile phone manufacturers, driving the 2.2 billion active users of smartphones into the AI stage. And Apple will take over this "pouring wealth", and the valuation will become even higher.

The bank also said that one of the keys to the success of AI phones is AI application developers. It believes that developers will develop a large number of AI applications that run on Apple's phones, thereby creating new revenue points for Apple.

(Finance Associated Press Huang Junzhi)

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