It’s time to make predictions about the upcoming new year. I agree with the Danish proverb. “Prediction is difficult, especially when dealing with the future.”
But I’m going to take the plunge and make some predictions for the new year. I think it’s Nvidia (NVDA 3.69%) It will become the first $4 trillion stock by 2025.
Why not Apple or Microsoft?
At first glance, my predictions may seem reckless. apple (AAPL 0.31%) Closer to $4 trillion market cap than Nvidia or Microsoft (MSFT -0.31%) It’s not even close to Nvidia. Apple’s stock only needs to rise about 4% to reach the threshold, while Microsoft’s stock would need to rise 22%. Nvidia stock needs to rise nearly 21%.
So why do I predict that Nvidia will reach the target first and not Apple or Microsoft? First, I think Apple and Microsoft stock prices will be depressed until both companies report their next quarterly results. I’m thinking. The Fed’s indication that it will cut interest rates less in 2025 is likely to put a damper on the momentum these two stocks have enjoyed in recent weeks.
Both Apple and Microsoft are delivering their next quarterly updates before Nvidia, and a positive result could send both stock prices over the $4 trillion mark. That’s especially possible with Apple, since its market cap is already so close.
However, I have a hunch that Apple’s fiscal 2025 Q1 results may be disappointing. why? Early reviews of Apple’s new generative AI features weren’t very good. A study conducted by SellCell.com found that 73% of iPhone users believe that AI features have little, if any, value.
Granted, this survey was taken before the arrival of iOS 18.2 with additional Apple Intelligence features. But the overall buzz I’ve seen online is that generative AI is unlikely to cause the massive iPhone upgrade supercycle that some analysts were predicting, at least not yet. , that is.
I wouldn’t be surprised if Microsoft exceeds expectations with its next quarterly update. However, the overall tone of management’s comments at the last earnings call makes us skeptical that the company will produce the results needed to become a major catalyst.
What will it take for Nvidia to become the first to reach $4 trillion?
If my assumptions about Apple or Microsoft turn out to be wrong, my predictions will be completely off. However, let’s assume that neither stock regains enough momentum to reach $4 trillion in market capitalization in the near term. What will it take for Nvidia to reach $4 trillion in the first place? I think you can answer it in one word. “Blackwell”.
Blackwell is Nvidia’s latest graphics processing unit (GPU) architecture. The company says it can run trillion-parameter large language models (LLMs) at up to 25 times lower cost and energy consumption than Hopper GPU platforms. Nvidia began shipping Blackwell GPUs in the fourth quarter.
“The demand for Blackwell has been phenomenal,” Nvidia CEO Jensen Huang said during the company’s third-quarter earnings call. He said in an October 2024 interview with CNBC that the demand for powerful AI chips is “insane.” Mr. Huang may have been too excited, but I think he was probably just stating the facts.
We expect investors to become increasingly excited about Blackwell’s prospects during the weeks in January and February leading up to the company’s first-quarter update. This could reverse Nvidia’s current stock price slump and put it within range of Apple’s market capitalization. In my view, better-than-expected Q1 results, combined with a particularly positive revenue forecast for Q2, could easily allow Nvidia to break through the $4 trillion market.
Can Nvidia break $5 trillion in 2025?
I/O Fund analyst Beth Kindig recently wrote that she believes Nvidia’s stock price could soar 70% in 2025. If she’s right, the chipmaker’s market capitalization will approach $5.6 trillion next year.
I’m not as bold a forecaster as Kindig. But she might be right. If she does, I think my prediction of NVIDIA being the first to reach $4 trillion will have a better chance of coming true.
Keith Speights has held positions at Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
