Markets

The $4 trillion chase is on for Apple and Nvidia

Tech giant was first to $1tn, $2tn and $3tn landmarks but faces strong competition from AI chipmaker on next market cap milestone

Apple faces a strong challenge from AI chip manufacturer Nvidia in the race to be the first $4 trillion company. Photograph: Indranil Aditya/Bloomberg
Apple faces a strong challenge from AI chip manufacturer Nvidia in the race to be the first $4 trillion company. Photograph: Indranil Aditya/Bloomberg
Proinsias O'Mahony
Mon Dec 09 2024 - 05:00

Nvidia hitting a market valuation of $7 trillion (€6.6 trillion) is one of Saxo Bank’s “outrageous predictions” – something that “while highly unlikely, could just happen” – for 2025. Here’s a less outrageous prediction: 2025 will see the world’s first $4 trillion company.

Apple was the first US trillionaire and the first US company to cross the $2 trillion and $3 trillion thresholds. Nvidia overtook Apple as the world’s most valuable company on several occasions this year, but the iPhone maker has regained top spot, breaking out to fresh all-time highs and a market capitalisation of $3.67 trillion – just 9 per cent below the $4 trillion threshold.

Nvidia, valued at $3.55 trillion, isn’t far behind. The stock sold off following its recent earnings report that saw it beat estimates but fall short of the so-called whisper number. However, the subsequent snapback rally suggests investors remain keen to buy the dips.

Suspicions regarding investor froth tend to focus on Nvidia more than Apple, courtesy of the AI giant’s astonishing share price gains (up more than tenfold since early 2023). But with a forward price/earnings (P/E) ratio of 34, Nvidia is actually trading well below its three- and five-year averages.

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Apple’s forward P/E (33) is almost identical to Nvidia’s, but far above where it has typically traded in recent years. A 50 per cent rally since April’s low suggests that enthusiasm regarding an AI-powered iPhone upgrade cycle is priced in. Still, greed tends to win over fear in bull markets. 2025 could be the year we witness not one but two companies breaching the $4 trillion barrier.

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Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column

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