apple Apple is currently the world’s most valuable company with a market cap of $3.4 trillion, but it is closely followed by two other tech giants, Microsoft (NASDAQ: MSFT) And Nvidia (NASDAQ: NVDA)It is worth noting that both Microsoft and Nvidia took turns becoming the most valuable company in the world this year, but Apple managed to regain the first place, thanks to the recent rise in the share price.
But if we compare Apple’s prospects to those of Nvidia and Microsoft over the next five years, it’s no surprise that Apple and Microsoft are worth more than the iPhone maker. Here’s a look at why.
1. Microsoft
Microsoft’s market cap is $3.3 trillion, which means it’s remarkably close to Apple right now. More importantly, Microsoft is growing faster than Apple, a trend that is likely to continue over the next five years, thanks to the increasing adoption of artificial intelligence In multiple markets.
For example, Microsoft’s revenue in the third quarter of fiscal 2024 (which ended March 31) rose 17% year-over-year to $61.9 billion. Meanwhile, Apple’s revenue in the second quarter of fiscal 2024 (for the three months ending March 30) fell 4% year-over-year to $90.8 billion. This stark difference in the performance of the two tech giants is largely due to AI.
While Microsoft is benefiting from multiple AI-driven growth trends such as cloud computing, personal computers and workplace collaboration tools, Apple has been late to the AI smartphone market. Microsoft’s intelligent cloud computing division reported a 21% year-over-year increase in revenue in the fiscal third quarter to $26.7 billion, driven by increased use of cloud-based AI services.
The company noted that its Azure cloud business received 7 percentage point increaseThanks to artificial intelligence. The cloud-based AI services market is expected to generate $647 billion in revenue in 2030, registering a CAGR of about 40% through the end of the decade, and Microsoft has a potential opportunity to significantly increase revenue in this market.
Microsoft’s 25% share of the cloud computing market in Azure means it’s well positioned to capitalize on this multi-billion dollar AI opportunity. But that’s not where Microsoft’s AI-driven incentives end. Its AI-generated chatbot Copilot, which serves both individual users and businesses, has seen healthy adoption.
For example, Microsoft’s Copilot for GitHub, a developer platform with over 100 million users, boasted 1.8 million paid subscribers at the end of March. Meanwhile, corporate adoption of Copilot to boost workplace productivity remains strong. As CEO Satya Nadella put it:
This quarter, we made Copilot available to organizations of all types and sizes from enterprises to small businesses, with nearly 60% of Fortune 500 companies now using Copilot and we’ve seen accelerated adoption across industries and geographies with companies like Amgen, BB, AwareKosh Industries, Moody’s, Novo NordiskNvidia, Tech Mahindra buy over 10,000 seats.
Microsoft charges $30 per user per month for enterprise customers for Copilot. The individual plan is priced at $20 per user per month. The company is already monetizing the AI assistant market, which is expected to grow eightfold over the next decade and generate revenue of about $167 billion in 2033.
The above AI-related catalysts point to why Microsoft’s annual earnings are expected to grow at 16% per year over the next five years compared to Apple’s expected growth rate of 10%. This could ultimately help Microsoft’s stock gain even more and become more valuable than Apple’s in the long run.
2. NVIDIA
Nvidia is currently the world’s third-largest company, with a market cap of $3 trillion. The semiconductor company’s shares have surged a remarkable 745% since the start of 2023 as companies like Microsoft and other tech giants have looked to acquire its GPUs to train and deploy AI models and services.
More importantly, Nvidia controls more than 90% of the AI chip market. This massive market share is the reason behind its phenomenal growth in recent quarters, resulting in a financial performance that is significantly better than that of Apple.
With the global AI chip market expected to grow tenfold over the next decade to a $300 billion market, there’s a good chance Nvidia’s impressive growth will continue. According to some analysts, the company’s data center revenue alone could jump to $280 billion over the next four years from $47.5 billion in the previous fiscal year.
Add to that additional catalysts, such as the recovery in the PC market thanks to the adoption of AI-powered computers (which is starting to lift Nvidia’s gaming business), and it’s easy to see why analysts expect Nvidia’s earnings to grow 46% annually over the next five years. That’s much faster than Apple’s expected growth over the same period.
Of course, Apple may get a boost from the advent of AI-powered smartphones, but investors should note that the company is operating in a highly competitive market. In Q2 2024, Apple’s smartphone market share was 15.8%, down from 16.6% in the same quarter in 2023. Its shipments grew by just 1.5% year-over-year, compared to the overall smartphone market’s growth of 6.5%.
It’s easy to see why Nvidia is expected to grow faster because it leads the AI chip market, while Apple operates in a crowded space where competitors have been quick to jump on the AI bandwagon. As such, the possibility of Nvidia overtaking Apple’s market share over the next five years cannot be ruled out, thanks to its rapid net profit growth, and AI will play a pivotal role in helping the semiconductor company achieve this.
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Harash Chauhan The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, BP, Microsoft, Moody’s, and Nvidia. The Motley Fool recommends Amgen, Cognizant Technology Solutions, and Novo Nordisk and recommends the following options: Buy $395 Jan 2026 Microsoft and Sell $405 Jan 2026 Microsoft. The Motley Fool has Disclosure Policy.
Prediction: Two AI Stocks Could Be Worth More Than Apple Five Years From Now Originally posted by The Motley Fool