No company has ever been worth $4 trillion, as measured by market capitalization, but Nvidia (NASDAQ:NVDA) As of this writing, Nvidia was worth about $3.6 trillion. At that size, it would only need to rise another 11% in value before crossing this threshold. This is important. Because second place Apple (NASDAQ:AAPL)which would need to rise 16% in value to outperform Nvidia outright, became the first company to cross the $1 trillion, $2 trillion, and $3 trillion market cap thresholds.
For those who care about financial metrics like this, the central question is: “Can Nvidia reach its next valuation milestone before Apple?”
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Nvidia and Apple took two different paths to get to this point. Apple has been steadily growing revenue and profits through a variety of consumer products, especially the iPhone, but that growth has slowed significantly in recent years.
Nvidia’s main product is the graphics processing unit (GPU), which was originally developed to speed up game graphics. The GPU’s unique ability to process multiple calculations in parallel makes it ideal for anything that requires intense calculations. This makes GPUs a strong choice for other difficult tasks, such as pharmaceutical research and engineering simulations.
But recently, the biggest use for Nvidia GPUs has emerged: training artificial intelligence (AI) models. Creating powerful AI models requires massive amounts of computing resources, and all AI hyperscalers are buying Nvidia GPUs by the truckload to build the necessary capacity.
This demand has caused Nvidia’s revenue to skyrocket, sometimes tripling year-over-year in the past few quarters.
In addition to soaring sales, Nvidia also saw its profit margins soar because it didn’t have to hire more people or ramp up production massively to keep up with soaring demand. Nvidia’s profits grew faster than its revenue due to the combined effect of higher revenue and higher profit margins.
The graph above may not seem impressive until you look at the scale and see that Nvidia’s profits are up more than 10x year over year in 2023.
Nvidia’s growth is starting to slow, but it’s still impressive.
Nvidia expects revenue to be approximately $32.5 billion in the third quarter of fiscal 2025 (ending October), representing 80% revenue growth. This is still very fast, but it’s starting to drop considerably from its previous levels. That’s because NVIDIA is entering a period of strong growth again from a year ago, and year-over-year comparisons are starting to become more difficult.
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