Bidding up the bullish case for Nvidia (NASDAQ:NVDA) has become a sport on Wall Street, with experts aiming for a massive benchmark. Given the robust performance of Nvidia stock and the soaring demand for artificial intelligence (AI), it’s possible that the underlying technology firm could overtake consumer electronics giant Apple (NASDAQ:AAPL) in terms of market capitalization.
A recent Reuters article showcased the latest such opinion. Fundamentally, Nvidia not only sells the hardware that makes AI applications possible but the brand is the most desirable. As a result, enterprises such as OpenAI — which made the popular ChatGPT chatbot — have helped Nvidia stock nearly triple in value in the past 52 weeks.
On the other end of the spectrum, Apple — which was once the number one enterprise — gave up pole position to Microsoft (NASDAQ:MSFT). Again, AI is partially responsible for the overtake. Microsoft is a major investor in OpenAI, which has helped open the floodgates for Azure, Microsoft’s cloud-computing platform.
Relevancy May Become Center Stage for Nvidia Stock
One reason for Apple’s fading market position is relevance. Earlier, the consumer tech giant couldn’t keep its latest gizmos and gadgets from flying out the door. Now, weak demand for its flagship iPhones and tough competition in China present significant headwinds against AAPL.
According to Brian Mulberry, client portfolio manager at Zacks Investment Management, “Apple’s innovation curve seems to have flattened, showing slower future growth.” In sharp contrast, “Nvidia has been able to catch wave upon wave of growth. Beginning with gaming demand, then crypto and now AI, they have been able to perfectly match innovation with demand and that equals explosive growth.”
However, Nvidia stock isn’t immune from relevancy risks itself. For one thing, while the semiconductor powerhouse is the most desired brand in the graphics processing field, the companies dependent on NVDA may seek to reduce this dependency.
Moreover, AI applications already consume as much energy as small countries. And that trajectory is expected to accelerate exponentially. Therefore, efficiency will likely be the key to sustained success for Nvidia stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
