Nvidia vs Apple: Billionaires' Divide
AInvestThursday, Dec 5, 2024 4:59 am ET
4min read
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NVDA --


In the dynamic world of technology, two giants, Nvidia and Apple, have been capturing the limelight. While both companies have been driving innovation in their respective domains, billionaire investors seem to have diverging opinions on their growth prospects. Let's delve into the reasons behind the billionaires' divide between Nvidia and Apple stocks.

Nvidia, the graphics processing unit (GPU) powerhouse, has been dominating the AI accelerator market with over 80% market share. Its CUDA software platform, a robust ecosystem of code libraries and pretrained models, has given Nvidia an edge in AI application development across various use cases. Competitors aiming to displace Nvidia would need to create a rival software development ecosystem, a challenging task given Nvidia's two-decade head start.

Nvidia's exceptional financial performance has also attracted billionaire investors. In the third quarter of fiscal 2025, the company reported sales rising 94% to $35 billion and non-GAAP net income jumping 103% to $0.81 per diluted share. Looking ahead, Wall Street expects adjusted earnings to increase 50% in the next 12 months, making the current valuation of 54 times adjusted earnings look relatively cheap.

Meanwhile, Apple's AI initiatives, while promising, are still in the early stages. The tech giant reported a 6% increase in sales to $95 billion in the fourth quarter of fiscal 2024, with revenue in its two most important product categories, iPhone and services, increasing 6% and 12% respectively. Wall Street expects Apple's adjusted earnings to increase 10% over the next 12 months, giving the stock a PEG ratio of 3.6, making it much more expensive than Nvidia.



As billionaires like Cliff Asness of AQR Capital Management, Steven Cohen of Point72 Asset Management, and Ken Griffin of Citadel Advisors are buying Nvidia while selling Apple, it reflects their bullish views on Nvidia's growth potential and concerns about Apple's high valuation and slowing product sales.

These investment decisions contrast with Warren Buffett's recent actions regarding Apple stock. Buffett, known for his long-term investment strategy, sold nearly half of Berkshire Hathaway's remaining stake in Apple, citing favorable tax laws and expectations of higher taxes in the future. This move highlights the diverse perspectives among billionaires on these two tech giants, with some favoring Nvidia's dominance in AI chips and others bullish on Apple's services growth and AI features.

In conclusion, Nvidia's dominance in AI, driven by its CUDA software platform and market-leading position in AI accelerators, has contributed significantly to its valuation and appeal among long-term investors. In contrast, Apple's AI initiatives, while promising, are still in the early stages, and its valuation is more heavily influenced by its established business model and brand authority. As billionaires continue to buy Nvidia and sell Apple, it reflects their bullish views on Nvidia's growth prospects and concerns about Apple's high valuation and slowing product sales. However, it's essential to remember that every investor has unique perspectives and risk tolerances, and individual investment decisions should be tailored to one's specific financial goals and circumstances.

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