Apple (NASDAQ: AAPL) is the world’s largest company, with a $3.37 trillion market cap. However, Nvidia (NASDAQ: NVDA) isn’t far behind, in second place with a $3.13 trillion valuation. To overtake Apple as the world’s largest company, Nvidia’s stock needs to rise around 8% while Apple’s stock stays flat.
Is this feasible? After all, Apple’s revenue over the last 12 months totals $385 billion, while Nvidia’s is a comparatively smaller $96 billion.
Apple has a growth problem, while Nvidia doesn’t
The current state of these two businesses couldn’t be more different.
Apple’s consumer products are quite popular in the U.S. and overseas. However, it struggled to turn this popularity into any sort of revenue growth recently, as its most popular device, the iPhone, failed to grow sales meaningfully over the past three years.
| Year | Q3 iPhone Sales |
|---|---|
| 2024 | $39.3 billion |
| 2023 | $39.7 billion |
| 2022 | $40.7 billion |
| 2021 | $39.6 billion |
Data source: Apple. Note: Apple’s Q3 ends around June 30 each year.
The big hope was that this year’s iPhone 16 launch would trigger an upgrade wave thanks to its ability to run Apple’s take on artificial intelligence (AI), Apple Intelligence. Unfortunately for Apple, many reports suggest the demand for the iPhone 16 hasn’t been great, affecting a potential business catalyst.
Nvidia isn’t having that same problem. Its graphics processing units (GPUs) are powering the AI revolution thanks to being best-in-class. The biggest AI companies are buying these GPUs by the thousands, which is massively benefiting Nvidia. In the second quarter of fiscal year 2025 (ending July 28), Nvidia’s revenue rose 122% year over year. That strength is also expected to continue next quarter, with management guiding for $32.5 billion in revenue, or about 80% year over year growth.
Nvidia is also expected see revenue growth at least through next year, as many companies are still building out their AI computing infrastructure. To add to Nvidia’s growth potential, it’s releasing its Blackwell architecture, unlocking massive speed gains compared to its current Hopper architecture.
Wall Street analysts believe Nvidia’s revenue will grow around 42% next year, far outpacing Apple’s projections of 8% growth.
Still, that growth won’t be enough to catch Apple in terms of revenue. So, how could a company that generates far less revenue overtake another as the world’s largest company?
Nvidia’s profits are set to explode next year
Revenue isn’t everything when assessing a company. What matters more are profits and valuation. If the only thing that mattered was revenue, then Walmart would be valued as the world’s largest company, as it generated $665 billion in revenue over the past year compared to Apple’s $385 billion.
When profits are considered, Nvidia starts to move a bit closer to Apple.
AAPL Net Income (TTM) data by YCharts
While Nvidia is rapidly closing the gap, it still generates about half the profits of Apple. But with its growth pace and stronger profit margin (55% compared to 26% for Apple), Nvidia could quickly catch Apple’s profit levels.
By the end of the next fiscal year for each company (Apple’s ends around the end of September while Nvidia’s ends in January), if each business maintains its current profit margin, Apple will generate about $110 billion in profits, while Nvidia would be slightly below at $98 billion.
That’s a huge gap to close in just a year’s time, but if Nvidia’s business grows the way analysts think it can, it will be right there with Apple.
Next comes valuation. Investors usually give companies premiums if they are growing at a faster pace or have a strong brand. Nvidia has both of these things, which is why its valuation is so high. On the other hand, Apple has a strong brand but slower growth. If Nvidia is expected to keep its revenue growth going through 2026, it will likely fetch a higher premium than Apple, which would probably propel it to overtake Apple as the world’s largest company.
Nvidia has a lot going for it, and its financial picture will change substantially over the next year. I think this could be enough to surpass Apple as the world’s largest company, as Apple has some growth issues it needs to address.
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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Nvidia, and Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
