Apple Inc (NASDAQ:AAPL) and Nvidia Corporation (NASDAQ:NVDA) are celebrated American technology brands based in California. Each has its fanatics and a major rival in the form of Android and Advanced Micro Devices, Inc. (NASDAQ:AMD), respectively.
However, as time moves on, they’re finding themselves in battles with companies on all sides. Nvidia’s cloud gaming service even brought Fortnite back to iPhones after it was removed amide the Epic v Apple lawsuit.
They’ve both been considered strong buys for some time, but which is best between Nvidia stock vs Apple?
Both reached historic high market capitalizations in the wake of the coronavirus. While Apple struggles to maintain a valuation of 2x its coronavirus crash low, Nvidia is sustaining a triple market cap from its low.
If you’re jumping in now, you may have less growth opportunity in either. Each company has its own unique challenges moving forward too. Here’s what you need to know about these beloved tech companies.
The New Virtual World Helps Nvidia Stock
Nvidia broke out in November to outperform the general market heading into the holidays. Its share prices are trading well above $550 and could circle $600 by year end. Analysts believe its buy point of $574 was already surpassed ahead of its November 18 earnings report.
This is a good sign that insiders know something good, and that’s likely tied to two things: new cards released on its latest GPU architecture and its cloud-based gaming service.
The company is expected to again surpass prior-year sales, showing little effect from the market crash that dragged its stock price down to $180.68 per share.
Investors who jumped on at that point made a 3x return on that investment within a year. Executive management further sparked buzz among bullish investors by announcing a $40 billion acquisition of Arm, which creates tech at the base of most mobile devices. This will be a great boost to a company already profiting from the rise in both video games and cryptocurrency mining.
In fact, the push to virtual work and school makes GPUs even more important than ever, as they’re necessary for Zoom video conferences and to perform professional tasks like graphic design or video production.
These processes take a lot of GPU power, which Nvidia provides in spades with its RTX 30xx series of graphics cards, which sold out in October preorders.
Perhaps the biggest question is whether it’s too bloated with a market cap over $350 billion and a 106.80 P/E ratio. It could find itself a casualty of the trade war between the United States and China.
Apple Shutting Retail Stores Doesn’t Hurt Sales
Apple is having a banner year in 2020, despite its retail stores taking a major hit from worldwide stay-at-home orders that shut their doors.
The company’s stock is trading over $110 after the election, giving it a solid $2 trillion market capitalization. It’s a long way from its 52-week low of $53.15 at the onset of the worldwide pandemic.
The storied tech company kicked off the holiday season with a new generation of iPhones and its HomePod smart speaker.
Its ecosystem includes computers, mobile, home entertainment, smart home, and more. It’s pushing for more enterprise customers too.
Apple TV Plus, the company’s video streaming service, is estimated to have 40 million users by the end of the year. Its content is being praised by users and critics alike, putting it in direct competition with services like Netflix, Disney Plus, and Amazon Prime.
However, some bearish investors believe the company’s P/E ratio of 36.24 signals that it’s overvalued. Like Nvidia, it could find itself caught up in the trade war. It has a wide exposure in China too, so let’s talk risks.
Nvidia Share Price Beating The Market
Nvidia is already outperforming the general market, and its latest generation of graphics cards are selling like hotcakes.
There are whispers of these sales being generated by bots though, so it’s unclear how many are actually on the market and how many are sitting for resale on the secondary market for inflated prices. This issue is plaguing the console makers too.
And there’s the risk of Nvidia’s Arm acquisition being blocked by Chinese regulators. Competitor Huawei is adamant that the merger would cause problems in market fairness.
These problems could cause Nvidia to lose market share to rival AMD. It’s also facing heavy competition from foreign GPU makers who rose to prominence with the crypto mining industry. Apple has its problems too.
Apple Vs Xiaomi Vs Samsung
Apple has a global presence, and it is the most profitable phone manufacturer. It faces heavy competition from the likes of Huawei, Samsung, and Xiaomi (XIACF) though. These companies have a stronger presence in Asian markets and could chip into the company’s profits in the 5G era.
It’s also spending a lot of money on Apple TV original content – the company has a reported $6 billion budget to attract Hollywood’s top talent.
That’s not a lot in a world where Netflix, Amazon, Comcast, Disney, and more have pockets deep enough to crown kings. This is all on top of the company’s long-standing rivalries with Google and Microsoft.
Apple Vs Nvidia Stock: The Bottom Line
Nvidia and Apple are two of the biggest tech companies in the world. They both rebounded from the coronavirus crash to experience all-time high market caps by the end of 2020. While Apple’s growth is stunted at the end of the year, Nvidia is still growing. The biggest question is whether either can sustain this growth.
Either could be overvalued at this point, and any regulation coming from China against these U.S. companies could cripple them. They also face heavy competition. However, bullish analysts believe they’ll maintain their value and create gains for investors over the next five years.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.