These tech leaders have been outstanding performers, but which one offers better returns from here?
Nvidia (NVDA -1.54%) has delivered market-smashing returns for investors. The graphics chip leader's share price has rocketed 1,900% over the last five years, outpacing the broader market and Apple's (AAPL -1.83%) 317% return.
Nvidia's superior returns reflect the tremendous growth it has experienced from data center customers for its high-powered graphics processors. However, Apple is the more valuable company right now, with a market capitalization of $2.8 trillion, and that is likely to increase as it wins more customers with the iPhone. This means Nvidia, which has a market of just under $2 trillion, will likely have to keep growing at high rates to surpass Apple's market value.
Let's see what Apple could be worth in six years and whether Nvidia can beat it.
Apple stock could rise as much as 80% using Wall Street's growth expectations
Apple has a diverse revenue stream coming from a roster of several products and services, but the iPhone is still the cash machine, making up 42% of the company's revenue in fiscal 2023. Dependency on the iPhone has made Apple's revenue growth inconsistent in recent years, but overall, Apple is benefiting from its growing installed base of devices, which is now over 2.2 billion and could keep growing for several more years.
The global smartphone market is expected to increase by a total of 1.5 billion users by 2029, according to Statista. If Apple captures 20% of that increase, consistent with its recent share of the global smartphone market, that would add another 300 million customers for the iPhone. That could significantly increase the company's installed base of devices as some of those customers go on to buy other products.
The Wall Street consensus has Apple's annual revenue reaching $512 billion by fiscal 2027, which would be annualized growth of 7.5% from last year's total.
Analysts project Apple's earnings per share to grow at a compound rate of 9.4% over the long term. It reported earnings per share of $6.13 last year, so that would put the company's earnings in 2030 at $11.64.
If Apple stock is still trading at a forward price-to-earnings (P/E) ratio of 28, the stock price would trade at $325 in 2030, or 80% above its current share price. Assuming Apple's shares outstanding remain constant, its market cap (stock price times shares outstanding) would also increase by 80% and reach $5 trillion in six years.
Nvidia's growth hinges on AI spending
Nvidia's market cap is currently $1.95 trillion, so its share price would have to more than double to match Apple's projected market cap of $5 trillion in six years.
The good news is that Nvidia is experiencing surging demand for its chip hardware as data centers start upgrading their systems to train a computer to learn by itself. Spending on artificial intelligence (AI) technology is projected to grow from $200 billion to $1.8 trillion by 2030, according to Statista.
Nvidia makes graphics processing units (GPUs) used for playing video games and powering incredibly complicated computing models for AI training, robotics, and self-driving cars. However, data center revenue made up 78% of the business last year and grew 217%.
As that triple-digit level of growth suggests, it's got a long growth runway. Most of Nvidia's data center growth has recently come from large cloud providers, but other industries are starting to invest in AI infrastructure, including healthcare and financial services.
Analysts expect Nvidia's total revenue to triple by 2027 to $192 billion. Earnings are projected to grow 35% per year, which would put its future earnings at $105 by 2030.
Nvidia trades at a high P/E based on its trailing earnings, but looking ahead to this year's estimate, it trades at a more reasonable forward P/E of 32. Assuming Nvidia is still trading at the same forward P/E, its stock price could reach $3,360 by the end of 2030, or 328% above the current share price. That would put its market cap at over $8 trillion.
Nvidia stock is the better buy
The GPU is essential to power the stringent demands on data processing that AI requires, and this market is dominated by a duopoly between Nvidia and Advanced Micro Devices. What makes Nvidia a safe bet is that it has led the GPU market for many years and currently controls an estimated 80% share of AI chips. Nvidia is more dominant in GPUs than Apple is in smartphones.
Nvidia appears to be on track to not only exceed Apple's market cap but potentially become the most valuable company in the world in the next decade.
John Ballard has positions in Advanced Micro Devices and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool has a disclosure policy.
FAQs
Nvidia appears to be on track to not only exceed Apple's market cap but potentially become the most valuable company in the world in the next decade. John Ballard has positions in Advanced Micro Devices and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia.
Could Nvidia be worth more than Apple? ›
It's now worth more than Amazon (about $1.9 trillion) and Alphabet ($2.1 trillion), and could soon leapfrog Apple ($2.9 trillion) and even Microsoft ($3.1 trillion). The semiconductor giant sticks out from its Big Tech peers, whose products are so integral to daily life.
Did Motley Fool recommend Nvidia? ›
The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services.
How much will Nvidia be worth in 2030? ›
Long-Term NVIDIA Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2027 | $ 6,434.55 | 485.44% |
| 2028 | $ 11,597 | 955.15% |
| 2029 | $ 20,901 | 1,801.70% |
| 2030 | $ 37,671 | 3,327.44% |
2 more rowsConsensus estimates predict Nvidia's earnings will increase at an annual rate of just over 35% for the next five years. Based on the company's fiscal 2024 earnings of $12.96 per share, its bottom line could jump to $58.11 per share after five years, assuming it does increase at the predicted rate.
Can NVDA reach $1,000? ›
Assuming that the share count remains constant, we can expect Nvidia's share price to reach around $820 in the best scenarios. Hence, even with highly optimistic back-of-napkin calculations, Nvidia does not seem to reach $1,000 per share in 2024.
Is Nvidia a safe long term investment? ›
Nvidia is in outstanding financial health. As of January 2024, the company held $26.0 billion in cash and investments, compared with $9.7 billion in short-term and long-term debt. Read more about Nvidia's financial strength.
Is Nvidia a buy, sell, or hold? ›
It's just hard to keep up that pace from an already lofty starting point, not to mention the limited supply of chip manufacturing services. So on a scale of buy, sell, or hold, I'd recommend simply holding on to most of your Nvidia shares for now -- with an eye toward buying more after a price correction.
Where will Nvidia stock be in 1 year? ›
Prediction 2: Nvidia will still dominate the market for artificial intelligence (AI) chips a year from now. Prediction 3: Nvidia stock, which closed at $1,096.33 on Friday, could reach $1,700 a year from now, assuming certain economic and stock market conditions.
Is Nvidia a millionaire maker stock? ›
The stock has shot up over 20,000% in the past 10 years, with these stunning gains crushing the Nasdaq-100 Technology Sector index's 428% jump by an astronomic margin. With an investment of $5,000 made in the stock a decade ago, Nvidia has become a millionaire-maker.
Coupled with Nvidia going from strength to strength and blowing past analyst expectations with its Q1 results, chances are it could go past Apple. According to the analysts at Morgan Stanley, Nvidia “shows no sign of slowing down" and that its "growth remains very strong through product transition."
Will Nvidia hit $2000 a share? ›
However, for Nvidia to get to $2,000, the company would have to continue to grow its revenue at the same pace as it has, which will likely not happen any time soon, given its slowing growth guidance.
What is the Motley Fool's top 10 stocks? ›
See the 10 stocks »
The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.
Is it too late to buy Nvidia? ›
Investors who have missed Nvidia's rally so far can still consider buying this AI stock, as it could keep heading higher.
What will Apple stock be in 5 years? ›
We think AAPL shares could reach $216 by the end of the year, $237 by the end of 2025, further rising to $298 by the end of 2026 and to $561 by the end of 2030.
What is the long term forecast for Nvidia? ›
Analysts have high expectations for NVIDIA stock price targets in 2025, driven by strong financial performance and strategic growth initiatives. Analysts forecast NVIDIA's full-year revenue to reach approximately $111.3 billion in 2025, a significant increase from the $26.97 billion reported in 2023.
Why did Apple stop supporting Nvidia? ›
AFAICT the answer is that Nvidia and Apple are not the best of friends, and Apple decided that they would not sign any newer drivers. This may have been at least partly because it restricts the numbers of people who try making hackintoshes out of existing machines.
Is Nvidia the richest company? ›
Just a decade after being valued at less than 2% of Apple, artificial intelligence sweetheart Nvidia is within striking distance of surpassing the iPhone maker as the world's second-most valuable company, and even Microsoft as the largest company on earth, a remarkable rise for a chip designer with a small consumer- ...
Does Nvidia have a good future? ›
Nvidia stock boasts a best-possible score of 99 on both its Composite Rating and EPS Rating. Its Relative Strength Rating of 98 also shows that it outperforms the vast majority of stocks in the Investor's Business Daily database. Nvidia also is one of the Magnificent Seven stocks that led the 2023 stock rally.
Is NVDA overpriced? ›
However, from a valuation perspective, I don't think Nvidia stock is expensive or overpriced. In fact, it may still represent good value. Nvidia currently trades at 35.4x forward earnings, making it more expensive than the S&P 500 (SPX), but it's by no means too expensive for the tech sector.
