Will Nvidia surpass Apple in value by 2030?

Over the past 7 years, NVIDIA's total market capitalization has achieved an astonishing rapid growth of 2,300%, which greatly exceeded Apple's growth rate of just over 400% during the same period.

The reason is easy to understand. The fact that the company's GPUs began to be applied in various industries, from computers to data centers, automobiles, and even factories, became a driving force, and the company's earnings and profits achieved astonishing growth over many years, and the market rewarded NVIDIA.

Meanwhile, Apple's growth is slower than NVIDIA. This is also because Apple is developing business in a market that has reached a saturation point.

According to information, smartphone sales remained flat in the third quarter of 2023. Meanwhile, personal computer (PC) shipments are expected to drop by nearly 14% this year. The reason why Apple's sales for the 2023 fiscal year (ending 2023/9/30) fell almost 3% from the previous year to 383 billion dollars is due to this market situation. Adjusted earnings were $6.13 per share, almost the same as the previous year.

Apple earned two-thirds of revenue in the previous fiscal year from sales of smartphones and personal computing devices such as iPads and Macbooks. Also, since there are multiple entrants in these markets, competition is intense. Apple is the second-largest smartphone manufacturer, but its market share is just under 18%. Apple's share of the PC market is 10.6%, ranking fourth in this field.

A significant increase in sales of PCs and smartphones cannot be expected in the long run. The average annual growth rate (CAGR) of the PC market until 2027 is predicted to remain at 3.1%. Smartphone shipments are expected to be even lower at a CAGR of 1.7% over the next 4 years, so analysts don't expect much of an acceleration in Apple's growth.

Furthermore, the company's earnings are expected to grow at an annual rate of only 6% over the next 5 years. This is far slower than the 21% annual profit growth that Apple has recorded over the past five years.

Assuming that profit growth of 6% can be maintained for the next 7 years, there is a possibility that profit will increase to 9.20 dollars per share in 2030 (based on earnings per share of 6.13 dollars in fiscal 2023).

If projected earnings for 2030 are multiplied by Apple's 5-year average forecasted profit ratio of 24 times, there is a possibility that the stock price will jump to 221 dollars by 10 years from now. This is only a 15% increase, indicating that the total market value in 2030 could reach $3.45 trillion.

Meanwhile, NVIDIA's annual profit growth rate is expected to reach a whopping 112% over the next 5 years.

While Apple is struggling with market saturation and congestion, NVIDIA boasts overwhelming strength in the rapidly growing AI chip market. Annual sales of the global AI chip market are estimated to reach 304 billion dollars in 2030 compared to 20 billion dollars in 2021. According to various third-party estimates, Nvidia controls 80% to 95% of this market.

However, it is not just this huge growth opportunity that NVIDIA is likely to benefit from over the next 7 years. There are multiple advantageous markets that the company can utilize, such as cloud gaming, automotive applications, and digital twins. The company estimates the market size it can handle at 1 trillion dollars spanning multiple end markets.

The company is expected to close its ongoing fiscal year with revenue of almost 59 billion dollars, which is a sharp increase of 118 percent from the previous fiscal year. In other words, NVIDIA still has a lot of room for growth, and you can see why analysts are constantly raising their forecasts.

Assuming that NVIDIA was able to achieve sales of 107 billion dollars in fiscal 2026, the 3-year sales CAGR based on sales of 27 billion dollars in fiscal 2023 is an astonishing figure of 58%. If the company can maintain a relatively conservative long-term profit growth rate of 25% from fiscal 2027 to fiscal 2031 (which overlaps with the 2030 calendar year), there is a possibility that the company's top line will reach 325 billion dollars by 10 years from now.

NVIDIA's 5-year PEG ratio is 20. Assuming that it is traded at a discount price of 15 times sales in 2030, there is a possibility that the total market value in 2030 will jump to close to 4.9 trillion dollars. Thus, there is a possibility that NVIDIA will overtake Apple's market capitalization in the long run, and given the speed at which the former is expected to benefit from multiple growth drivers, this should not be surprising.