"4% left"...Will Apple (AAPL) snatch the throne from NVIDIA (NVDA)?

▲ Apple (AAPL), Micron (MU), Memory Chip/AI Generated Image

Apple (AAPL) is on the verge of reclaiming its position as the world's number one in market capitalization, having narrowed the gap with NVIDIA (NVDA) to just 4%. With the market cap difference shrinking to $190 billion, Apple's earnings announcement on July 30 has emerged as the biggest decisive factor that could flip the rankings of the two tech giants.

According to investment media outlet The Motley Fool on July 3 (local time), NVIDIA's market capitalization was approximately $4.7 trillion, $190 billion ahead of Apple's approximately $4.5 trillion. The gap is only about 4%. Apple's stock price jumped approximately 5% last Thursday after reports of an expanded iPhone product line, while NVIDIA fell amidst a general sell-off in semiconductor stocks, rapidly narrowing the gap.

In terms of business growth speed alone, NVIDIA's superiority is clear. NVIDIA's revenue for the first quarter of fiscal year 2027 surged by 85% year-over-year to $81.6 billion, with data center revenue hitting a record high of $75.2 billion. Its price-to-earnings ratio is approximately 30x. Data center revenue nearly doubled year-over-year, and the gross profit margin remained around 75%.

Apple holds the counterattack card. Apple will announce its third-quarter earnings for fiscal year 2026 on July 30, with revenue growth forecasts of 14-17%. Revenue in the previous quarter increased by 17% year-over-year to $111.2 billion, and iPhone sales jumped by 22%. Expectations for a foldable iPhone, potentially unveiled this fall, and five new iPhone models were also cited as factors supporting the stock price.

However, valuation is a burden for Apple. Apple's price-to-earnings ratio is approximately 37x, higher than NVIDIA's 30x. In terms of revenue growth, Apple's is 17% and NVIDIA's is 85%, meaning NVIDIA's growth rate is about five times faster. The media pointed to Apple's stable profit streams, its service business generating high-margin recurring revenue, and lower cyclicality compared to semiconductor companies as reasons for its high corporate value.

The Motley Fool assessed that if strong July 30 earnings from Apple coincide with a semiconductor industry downturn, the market capitalization ranking could be overturned within weeks. In the long term, it weighed the possibility of Apple becoming a larger company than NVIDIA, citing Apple's lower cyclicality, loyal customer base, and potential for new business expansion. Conversely, NVIDIA's lower price-to-earnings ratio compared to Apple and its overwhelming revenue growth were presented as investment attractions.

[Article Summary]

-The market capitalization gap between Apple and NVIDIA has narrowed to $190 billion, approximately 4%.

-NVIDIA recorded 85% revenue growth, but Apple is catching up, leveraging its July 30 earnings and expectations for new iPhones.

-The Motley Fool assessed that if Apple's strong earnings and a semiconductor stock downturn align, the world's number one market capitalization could change within weeks.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*