Nvidia (NVDA 2.27%) and Apple (AAPL -3.19%) are the two largest companies in the world by market capitalization. While Nvidia is valued at roughly $3.38 trillion as of this writing and stands as the second-biggest business, Apple has a valuation of $3.46 trillion and is at the top of the heap.
Notably, both of these tech giants are leaders in different corners of the hardware market. Nvidia is the leading designer of advanced graphics processing units (GPUs) for artificial intelligence (AI) and data center computing. Meanwhile, Apple leads the smartphone market with its iPhone lines and captures the majority of global operating profits from mobile phone sales.
As hardware-focused businesses, Apple and Nvidia's position atop the list of the world's most valuable companies looks even more noteworthy because software-focused businesses usually tend to be more profitable. But while Apple should be able to continue commanding very strong margins on its mobile hardware and other offerings in 2025, the stage could be set for Nvidia to deliver superior stock performance and take the title of "world's most valuable company" this year.
Nvidia's outlook for 2025 appears stronger than Apple's
Nvidia stock has been on an incredible run as rising demand for AI technologies has spurred massive sales and earnings growth for the company. The AI leader's share price rocketed 131.5% higher over the last year, and there were brief periods in 2024 when it had a higher market cap than Apple and stood as the world's largest company. While Nvidia's business has historically been shaped by cyclical demand trends in the semiconductor industry and will face tougher growth comparisons in 2025, its outlook still appears stronger than Apple's.
Apple is facing some performance headwinds in China -- its second-largest geographic segment by revenue. The mobile hardware giant hasn't been able to find a suitable Chinese partner to incorporate its Apple Intelligence platform into its latest iPhones. Due to regulations put in place by China's government, many products and services need to have a domestic operational partner in order to be sold in the country. As a result, the iPhone 16s in China do not have the Apple Intelligence platform and are facing a tougher competitive environment because of it.
Apple is also facing some regulatory pressures in the domestic market. In March of last year, the U.S. Department of Justice (DOJ) filed an antitrust suit against the company alleging that it has created an illegal monopoly on the smartphone market by tying developers into its ecosystem through contractual restrictions. While it's possible that the DOJ under the new Trump administration will take a comparatively hands-off approach to antitrust matters and other issues compared to operations under the Biden administration, it's not clear the iPhone maker will benefit from this dynamic.
Margins and sales trends support Nvidia taking the crown
Over the trailing-12-month period, Apple posted a gross profit of $180.7 billion on sales of $391 billion -- good for a gross margin of 46.2%. Meanwhile, Nvidia has posted a gross profit of $85.9 billion on sales of $113.3 billion across the same stretch -- representing a gross margin of 75.8%. So while Apple has generated far more overall sales and gross profit over the past year, Nvidia's gross profit margin is far higher. This distinction becomes even more significant when looking at recent sales momentum for both businesses.
Nvidia's revenue increased 94% year over year to reach $35.1 billion in its most recently reported quarter (ended Oct. 27, 2024). Earnings per share for the period surged 111% annually to reach $0.78.
For comparison, Apple's revenue increased 6% year over year to $94.9 billion -- and its diluted earnings per share rose 12% to hit $1.64. Market data from Counterpoint Research suggests that Apple's iPhone unit shipments fell 5% year over year in the final quarter of 2024, so sales growth will be harder to deliver with its next financial report.
In order to return to stronger sales and earnings growth, Apple may need to deliver a new product or a software service offering with a more groundbreaking impact. The company's iPhone lines reliably serve up strong sales and great margins, but the smartphone market is saturated -- and growth has become harder to deliver.
In contrast, the demand outlook for Nvidia's GPUs continues to be very strong in 2025 amid ongoing AI infrastructure spending, and the rollout of the company's new Blackwell processors should support strong sales expansion and margins. With that in mind, I think there's a very good chance that Nvidia will take the title of "world's most valuable company" back from Apple and hold on to it for most of this year.
