I can envision some paths to this happening. A few possibilities that come to mind among others are: - Apple could tank (Warren Buffett recently slashed his holdings, but he probably should have done this a while ago anyway for diversification reasons, still he's an undeniably good investor) and Microsoft could sputter. - There could be another generative AI-driven rally - The Fed could lower interest rates or some other event could trigger a market surge where NVDA with its higher beta (1.75) rapidly outpaces MSFT (1.17) and AAPL (1.18)
AAPL is the main one to beat and it's pretty correlated with NVDA, so I'll put the most analysis into the third bucket I mentioned where there's a market surge and then add some additional uncertainty. Apple is about 11% bigger than NVIDIA now, so in my model, under most normal circumstances, NVIDIA would have to grow by a lot since Apple would also be increasing in value simultaneously. According to my very rough back of the envelope calculations, according to the betas, I would expect that, in order for NVIDIA to have a 50:50 shot to overtake Apple, we'd need to see the market go up by around 27.5%. In this scenario, I would expect Apple to go up by about 32% and NVIDIA to go up by 46%. Based on the last year of NVIDIA price fluctuations, a Monte Carlo simulation suggests a 46% increase should happen about 24% of the time. Given that that's the median (NVIDIA could still outperform relative to Apple) I'll increase it a bit, but also save some room for something unexpected to happen with Microsoft. On balance, I'll put my estimate just under 30% for now.
I can envision some paths to this happening. A few possibilities that come to mind among others are:
- Apple could tank (Warren Buffett recently slashed his holdings, but he probably should have done this a while ago anyway for diversification reasons, still he's an undeniably good investor) and Microsoft could sputter.
- There could be another generative AI-driven rally
- The Fed could lower interest rates or some other event could trigger a market surge where NVDA with its higher beta (1.75) rapidly outpaces MSFT (1.17) and AAPL (1.18)
AAPL is the main one to beat and it's pretty correlated with NVDA, so I'll put the most analysis into the third bucket I mentioned where there's a market surge and then add some additional uncertainty. Apple is about 11% bigger than NVIDIA now, so in my model, under most normal circumstances, NVIDIA would have to grow by a lot since Apple would also be increasing in value simultaneously. According to my very rough back of the envelope calculations, according to the betas, I would expect that, in order for NVIDIA to have a 50:50 shot to overtake Apple, we'd need to see the market go up by around 27.5%. In this scenario, I would expect Apple to go up by about 32% and NVIDIA to go up by 46%. Based on the last year of NVIDIA price fluctuations, a Monte Carlo simulation suggests a 46% increase should happen about 24% of the time. Given that that's the median (NVIDIA could still outperform relative to Apple) I'll increase it a bit, but also save some room for something unexpected to happen with Microsoft. On balance, I'll put my estimate just under 30% for now.