Could Nvidia Surpass Apple as the Largest Company in 2025?

Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL) are two of the biggest companies globally, known for their high market capitalization. Currently, Nvidia is valued at approximately $3.38 trillion, making it the second-largest company, while Apple holds the top position with a valuation of around $3.46 trillion.

Both companies excel in different areas of technology. Nvidia leads the market in advanced graphics processing units (GPUs), particularly for artificial intelligence (AI) and data center computing. On the other hand, Apple dominates the smartphone market through its iPhone lineup and secures a large share of global profits from mobile device sales.

These companies' prominence is even more impressive since hardware firms usually face tougher competition than software firms, which often yield higher profits. Apple is expected to maintain strong profit margins on its mobile hardware and other products as we move into 2025. However, Nvidia is positioned for potentially superior stock performance, raising the question of whether it could become the "world's most valuable company" this year.

Nvidia's Prospects for 2025 Look Promising

Nvidia's stock has surged significantly as demand for AI technologies continues to rise, leading to impressive sales and earnings growth. Over the past year, Nvidia's share price has jumped by 131.5%, and there were moments in 2024 when its market cap exceeded that of Apple, making it the largest company at times. Although Nvidia's business does commonly experience cycles influenced by the semiconductor industry and may face more challenging growth comparisons in 2025, its outlook is still deemed stronger than Apple's.

Apple is currently facing challenges in its performance in China, its second-largest revenue share market. The company has struggled to find a local partner to integrate its Apple Intelligence platform into its latest iPhones due to strict regulations mandated by the Chinese government. As a result, the iPhone 16s sold in China lack this platform, making it harder to compete effectively.

Additionally, Apple is encountering regulatory hurdles domestically. Last March, the U.S. Department of Justice (DOJ) initiated an antitrust lawsuit against Apple, claiming it has created an illegal monopoly in the smartphone market by limiting developers through contractual ties to its ecosystem. While there are suggestions that the DOJ might adopt a less aggressive stance under the new Trump administration, it's uncertain whether this would benefit Apple.

Trends in Profit Margins and Sales Favor Nvidia

Looking at financial performance, Apple reported a gross profit of $180.7 billion on sales amounting to $391 billion over the last twelve months, equating to a gross margin of 46.2%. In contrast, Nvidia achieved a gross profit of $85.9 billion from $113.3 billion in sales, resulting in a significantly higher gross margin of 75.8%. While Apple outruns Nvidia in total revenue and gross profit in absolute terms, Nvidia's gross margin is considerably stronger, highlighting its operational efficiency.

For context, Nvidia's revenue increased by 94% year over year, reaching $35.1 billion in its latest quarter ending on October 27, 2024. Its earnings per share surged 111% annually to $0.78.

In comparison, Apple's revenue saw a modest increase of 6% year over year, totaling $94.9 billion, with diluted earnings per share rising by 12% to $1.64. Moreover, data from Counterpoint Research indicate that Apple's iPhone shipments dropped by 5% year over year in the last quarter of 2024, suggesting that generating sales growth may be increasingly difficult in the near future.

To boost its sales and earnings growth, Apple may need to introduce innovative products or groundbreaking software services. Although the iPhone lineup consistently delivers strong sales and profitability, the smartphone market is saturated, complicating further growth.

In contrast, the outlook for Nvidia's demand for GPUs remains robust in 2025 as AI infrastructure spending continues to rise, alongside the launch of the company’s new Blackwell processors, predicted to enhance sales growth and margins. Therefore, there is a good chance that Nvidia may reclaim the title of "world's most valuable company" from Apple and sustain that lead for a substantial part of the year.

No positions are held by the author in any of the stocks mentioned. Additionally, the author recognizes that the companies involved may have recommendations and positions elsewhere.

Nvidia, Apple, Market