Investors should pay close attention to trades made by Steven Cohen. Point72 ranks among the top 15 hedge funds in terms of net profits since inception, according to LCH Investments. That said, the above transactions were made during the third quarter, which ended in September. So here’s what investors need to know about Nvidia and Apple right now.
Nvidia is driving the artificial intelligence (AI) boom. Most investors probably know that Nvidia graphics processing units (GPUs) are used to accelerate data center workloads, such as training machine learning models and running AI applications. In fact, the company has more than 80% market share in the AI accelerator space, according to several analysts.
What investors may not know is that Nvidia’s dominance in the AI accelerator market is based not only on the superior performance of its chips, but also on the reach of its CUDA software platform . CUDA includes hundreds of code libraries and pre-trained models that streamline the development of AI applications in use cases ranging from recommender systems to autonomous robots.
That means competitors looking to overcome Nvidia’s dominance will need more than just fast chips. They will also need to create a robust software development ecosystem that rivals CUDA. But it’s easier said than done. Nvidia has been developing its CUDA platform for almost two decades. Therefore, the company is well positioned to maintain its leadership in the AI accelerator market.
Nvidia reported exceptional financial results for the third quarter of fiscal 2025. Sales increased 94% to $35 billion and non-GAAP net income jumped 103% to $0.81 per diluted share. This is the sixth consecutive quarter in which Nvidia has reported triple-digit profit growth.
Looking ahead, Wall Street expects adjusted earnings to rise 50% over the next 12 months, making the current valuation of 54 times adjusted earnings look relatively cheap. Potential investors can buy a small position with confidence today. I think most analysts who follow Nvidia would agree. The stock has a median target price of $175 per share, implying a 25% upside from its current price of $140.
Apple has a key competitive advantage in brand authority, which itself forms the basis of pricing power. For example, the average iPhone sold for over $900 in the third quarter, while the average price Samsung Android phone sold for less than 300 dollars. Importantly, Apple is the market leader in smartphone sales and second in smartphone shipments, according to Counterpoint Research.
Apple also has a strong competitive position in other consumer electronics verticals. The company ranks fourth in personal computer (PC) shipments, first in smartwatch shipments, and first in tablet shipments. While Apple monetizes consumers with devices, it also generates higher-margin revenue by providing adjacent services such as App Store downloads, iCloud storage and Apple Pay, as well as subscriptions like Apple TV+.
Apple is a major player in several of these service markets. For example, the App Store is the top-ranked mobile app store by revenue, and its sales are growing faster than its closest competitor. Alphabetfrom the Google Play Store. Additionally, Apple Pay is the most popular in-store mobile wallet among U.S. consumers.
Apple reported decent financial results in the fourth quarter of fiscal 2024, which ended in September, narrowly beating estimates for both revenue and net income. Total sales increased 6% to $95 billion, and revenue from the two largest product categories – iPhone and services – increased 6% and 12%, respectively. Meanwhile, non-GAAP earnings rose 12% to $1.64 per diluted share.
Looking ahead, Wall Street expects Apple’s adjusted profit to increase 10% over the next 12 months. This consensus forecast makes the current valuation of 36 times adjusted earnings very expensive. These numbers give Apple a price-to-earnings-to-growth (PEG) ratio of 3.6, making the stock significantly more expensive than Nvidia, which has a PEG ratio just above 1.
For this reason, I think potential investors should avoid Apple for now, and current shareholders should consider reducing their large positions.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Trevor Jennewine holds positions at Nvidia. The Motley Fool holds positions and recommends Alphabet, Apple and Nvidia. The Motley Fool has a disclosure policy.
Nvidia Stock vs. Apple Stock: Billionaires Buy One and Sell the Other was originally published by The Motley Fool
