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Nvidia (NVDA) stock hit a record high on Tuesday, and finally surpassed the previous all-time high that it set in June. However, NVDA closed slightly in the red yesterday, as it could not hold on to its intraday highs. Based on yesterday’s closing prices, Nvidia had a market cap of $3.5 trillion, which is only a touch short of Apple’s (AAPL) $3.6 trillion market cap. Can NVDA become the biggest company in the world in Q4 as analysts turn incrementally more bullish on the Jensen Huang-led company?
It Has Been a Game of Musical Chairs at the Top
Usually, the title of the “world’s biggest” has stayed with the same company for an elongated period of time before a challenger decisively beats them. For instance, Apple became the world’s most valuable company in 2011, when it surpassed energy giant ExxonMobil (XOM), which was then holding the title. Since then, the iPhone maker has held on to the position of being the world’s largest company for the most part, aside from a few brief incursions.
However, it has pretty much been a game of musical chairs this year, as Apple, Microsoft (MSFT), and Nvidia have all been jostling for the coveted crown. While Apple was the biggest company at the beginning of the year, Microsoft edged past the iPhone maker by mid-January. By March, Microsoft had extended its lead over Apple by a massive $400 billion.
However, in June, Nvidia outflanked both Microsoft and Apple to become the world’s largest company – a possibility no one had envisioned just a couple of years back, and especially not so soon.
Apple Is Still the Biggest Company By a Small Margin
Apple, however, soon reclaimed its title, after the Cupertino-based company announced a flurry of new artificial intelligence (AI) features and unveiled what it termed “Apple Intelligence.” However, amid the recent rally in Nvidia - which has gained around 22% over the last month - its market cap is now very close to Apple. The field has opened up, especially as we are in the thick of earnings season, where price action can be quite volatile.
This holds especially true now, as Apple’s upcoming earnings will reveal the demand environment for its AI-powered iPhone 16. Nvidia will also need to justify its recent rally with commensurate growth, and importantly, it needs to allay fears that it can continue its growth trajectory beyond 2025. Microsoft, meanwhile, needs to convince markets that its AI investments – including the multi-billion dollar bet on OpenAI – can be effectively monetized.
Analysts Are Getting Even More Bullish on Nvidia
Wall Street analysts are getting incrementally more bullish on Nvidia, and Bank of America just raised the chip designing company’s target price to $190. The brokerage sees a “generational opportunity” in AI, and said in its note “Driven by our increased NVDA Data Center Compute outlook, we now see the AI accelerator market growing to $280bn by CY27E (and over time toward $400bn+) from just ~$45bn in CY23.”
Goldman Sachs also came back impressed after meeting with CEO Jensen Huang, and raised Nvidia's target price to $150. While the firm pointed to uncertainty over Nvidia’s revenue growth beyond 2025, it added, “We expect the stock to perform at least consistent with estimate revisions given relative valuation multiples that remain depressed relative to history.”
Nvidia’s Street-high target price, however, remains $200, which implies an upside of almost 40% over yesterday’s closing prices. If Nvidia hits that price level, its market cap would reach almost $5 trillion.
Apple Is Set to Release Its Earnings Later This Month
As for Apple, its Street-high target price of $300 is about 27% higher than yesterday’s closing prices. Sell-side analysts are a lot more bullish on Nvidia – which has a consensus rating of “Strong Buy,” compared to Apple and its consensus rating of “Moderate Buy.”
Apple is set to release its fiscal Q4 2024 earnings on Oct. 31. This will be among the company's most crucial releases in recent quarters, and help gauge the initial demand for the iPhone 16. Also, the company might talk more about the timeline for Apple Intelligence, including in China and the E.U., where the features won’t be available initially due to regulatory issues.
We won't hear from Nvidia for at least a month, so a lot will depend on Apple’s confessional in the immediate term. However, Nvidia stock might react to the comments that other tech companies make on their AI capex during their earnings calls, as much of that spending has been landing in the company's coffers. The launch of Blackwell chips could also help drive NVDA stock higher in Q4.
Separately, the upcoming U.S. presidential elections could also lead to volatility in both Nvidia and Apple, given Donald Trump's tough stance on China - which happens to be a big market for both companies. Incidentally, both Apple and Nvidia crashed in Q4 2018, when the U.S.-China trade war escalated in Trump’s first presidency.
All of that said, I believe the race for the title of the world’s biggest company looks quite open, even as the momentum currently lies with Nvidia. Analysts are mixed about Apple heading into its fiscal Q4 confessional, considering the high expectations from the iPhone 16. If Apple’s earnings fail to impress, it might see downwards price action, and the company could lose the crown of the world’s biggest company.
On the date of publication, Mohit Oberoi had a position in: AAPL , NVDA , MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
