As Nvidia prepares to launch its new GPU, analysts suggest a significant increase in AI spending that may impact market valuations, particularly for tech giants like Apple.
As the global technology landscape shifts, artificial intelligence (AI) continues to emerge as a transformative force, particularly for businesses in the tech sector. According to a report from Yahoo News, Apple currently holds the title of the most valuable publicly traded company, boasting a market value of $3.9 trillion. Despite this achievement, Apple has not yet capitalised on the monetisation of AI technologies, presenting opportunities for other companies that are more directly engaged in the AI space.
Two significant players in this arena are Nvidia and Alphabet. Nvidia, with a current market value of $3.4 trillion, may surpass Apple in value should its share price increase by 17% over the next year, pushing it to a valuation of $4 trillion. Conversely, Alphabet, valued at approximately $2.4 trillion, would need a more substantial share price increase of 67% to reach the same market threshold.
Nvidia has been foundational to the AI boom, predominantly through its graphics processing units (GPUs), which have become the industry standard for accelerating complex data tasks within data centres. The company also dominates the market for InfiniBand networking technology, currently preferred for backend networks in AI applications. The company experienced remarkable financial results in the third quarter of fiscal 2025, reporting a staggering 94% increase in revenue to $35 billion, driven particularly by its data centre operations, along with significant growth in its automotive and robotics segments. Furthermore, Nvidia’s non-GAAP net income doubled, reaching $0.81 per diluted share.
Looking ahead, Nvidia is gearing up for the launch of its Blackwell GPU, a critical advancement within its product line. Compared to its predecessor, the Hopper chip, the Blackwell GPU can execute AI training tasks up to four times faster and AI inference tasks up to 30 times faster. The company has already initiated production, anticipating substantial sales for the new GPU over the coming year.
Market analysts from Morgan Stanley forecast a more than 50% increase in spending on cloud AI semiconductors in the upcoming year, paving the way for robust earnings growth within Nvidia. Analyst expectations suggest its adjusted earnings could see a growth rate of 50% over the next four quarters, indicating that its current valuation of 53 times adjusted earnings may be considered relatively low. For Nvidia to attain a market value of $4 trillion, its stock price needs to reach $164 per share. If the company meets Wall Street’s earnings expectations and shares are trading above 42 times earnings, it could achieve this milestone well before the end of 2025.
In this rapidly evolving sector, Nvidia’s advancements in AI technology and strategic developments are making it a key focus for investors as they anticipate substantial growth in the AI market. The current movements in share prices among these major tech companies illustrate the competitive landscape as firms look to leverage AI capabilities and reshape business practices.
Source: Noah Wire Services
- https://www.oberlo.com/statistics/apple-market-cap – Corroborates Apple’s market value and its historical growth, although the exact figure mentioned in the article ($3.9 trillion) is slightly different from the $3.5 trillion mentioned here.
- https://www.oberlo.com/statistics/apple-market-cap – Provides details on Apple’s market capitalization over the years, supporting its position as the most valuable publicly traded company.
- https://en.cryptonomist.ch/2024/11/11/apple-accelerates-the-race-for-artificial-intelligence-ai-with-new-monetization-strategies/ – Explains Apple’s strategy on AI monetization, highlighting that Apple does not charge users directly for AI tools, which aligns with the article’s mention of Apple not yet capitalizing on AI monetization.
- https://www.ainvest.com/news/alphabet-poised-to-drive-market-growth-in-second-half-of-2024-with-ai-strength-24071000a24162e4c3e23ca2/ – Discusses Nvidia’s dominance in the AI market, particularly through its GPUs, and Alphabet’s potential to become a market leader in AI cloud computing.
- https://www.ainvest.com/news/alphabet-poised-to-drive-market-growth-in-second-half-of-2024-with-ai-strength-24071000a24162e4c3e23ca2/ – Provides information on Nvidia’s market share and financial performance, including its significant growth driven by AI adoption.
- https://www.ainvest.com/news/alphabet-poised-to-drive-market-growth-in-second-half-of-2024-with-ai-strength-24071000a24162e4c3e23ca2/ – Mentions Nvidia’s strong performance and potential for further growth, aligning with the article’s forecast of Nvidia’s future earnings and market value.
- https://www.ainvest.com/news/alphabet-poised-to-drive-market-growth-in-second-half-of-2024-with-ai-strength-24071000a24162e4c3e23ca2/ – Discusses Alphabet’s potential to become a market leader in AI cloud computing, supporting the competitive landscape described in the article.
- https://en.cryptonomist.ch/2024/11/11/apple-accelerates-the-race-for-artificial-intelligence-ai-with-new-monetization-strategies/ – Details Apple’s innovative methods to monetize AI without direct costs to users, which contrasts with other companies’ strategies.
- https://www.oberlo.com/statistics/apple-market-cap – Provides context on Apple’s market value and growth, which is relevant to comparing it with Nvidia and Alphabet’s market values.
- https://www.ainvest.com/news/alphabet-poised-to-drive-market-growth-in-second-half-of-2024-with-ai-strength-24071000a24162e4c3e23ca2/ – Highlights the importance of Nvidia’s GPUs in AI applications and their impact on the company’s financial performance.
- https://getcoai.com/news/apples-ai-strategy-wont-include-charging-users-says-tim-cook/ – Supports Apple’s strategy of not charging users for AI features, aligning with the article’s mention of Apple’s approach to AI monetization.
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