Tech stocks captured Wall Street's attention in 2023 after falling out of favor amid macroeconomic headwinds last year. Developments in artificial intelligence (AI) and virtual/augmented reality (VR/AR) sent shares in several related companies soaring, with Apple (AAPL -0.65%) and Nvidia (NVDA -0.01%) stocks up 28% and 90%, respectively, since Jan. 1.

These companies have solid histories of growth thanks to substantial market shares in their respective industries. Apple became a mammoth in tech because of its dominance in consumer products, while Nvidia profited from increasing demand for its chips. 

These companies are building the future as the potential leaders of two high-growth markets: AI and VR/AR (aka the global XR market). The question is, which industry is likely to offer more significant gains over the long term?

So let's consider whether Apple or Nvidia is the better growth stock right now. 

Apple: The future leader of a $31 billion market

Apple has rallied investors this year with a planned venture into the global XR market, with a new headset projected to launch in 2023. Related acquisitions and patents filed over the years have all but confirmed the company's interest in the industry. However, a Bloomberg report in January revealed new details about the coming device, which is expected to feature virtual and augmented features alongside an iPhone-like OS and retail for around $3,000.

According to Statista, the VR and AR market will achieve a value of $31 billion in 2023, projected to expand at a compound annual growth rate (CAGR) of 13.7% through 2027. The industry's outlook is positive for Apple. However, recent headwinds could prove tricky for the company to overcome. 

Meta Platforms achieved an 81% market share in global XR, according to Counterpoint Research, thanks to its line of Quest headsets. The company has sunk billions into growing the market and its metaverse, or what it sees as the next iteration of the internet. However, recent price drops for its headsets suggest encouraging consumers to adopt the technology has been challenging. Meanwhile, Microsoft and Disney recently sunsetting their metaverse divisions speaks volumes about their expectations for the future of AR and VR.

Apple has a solid history of defying expectations when entering new markets. It has been a major driver in the mass adoption of numerous technologies, such as smartphones, tablets, smartwatches, and Bluetooth headphones. However, it likely has a mountain to climb to get its coming VR/AR headset into the hands of consumers.

Nvidia: A crucial role to play in the development of AI

Nvidia's stock skyrocketed in 2023, experiencing a strong recovery after plunging 50% last year. Investors grew particularly bullish over the company's prospects in AI, which has experienced a boom in recent months. 

The launch of OpenAI's ChatGPT stunned the tech world last November with its ability to produce human-like dialogue based on prompts. The advanced chatbot prompted numerous tech companies to pivot their businesses toward AI development to join the burgeoning industry. 

The AI market hit a value of $137 billion in 2022 and is expected to see a CAGR of 37.3% through 2030 (per Grand View Research). The technology has the potential to enhance countless industries, from cloud computing to education, healthcare, and more. Meanwhile, Nvidia is home to the hardware required to run and develop AI software with its graphics process units (GPUs). 

In fact, Nvidia is the primary supplier of GPUs to ChatGPT, which unitized 20,000 units in 2020. According to research from TrendForce, that figure will likely hit 30,000 soon as ChatGPT prepares for commercialization. Alongside competing AI platforms currently in development, demand for Nvidia's GPUs could surge in the coming years. 

Is Apple or Nvidia the better growth stock?

Apple's market cap of $2.6 trillion compared to Nvidia's $686 billion make these companies vastly different in size and value. However, that could play in Nvidia's favor, with more room for growth as the less mature company. This is evident by comparing the companies' five-year stock performance, with the chart below showing that Nvidia has outperformed Apple.

NVDA Chart

Data by YCharts

Moreover, there is very little contest between choosing to invest in the future of the global XR market or AI. VR/AR has vast potential, and if Apple and Meta's hopes for the technology come to fruition, it could change everything. However, AI currently has more tangible applications, already utilized in many industries. Additionally, Nvidia's role as a supplier of GPUs to ChatGPT strengthens the argument for the semiconductor company.

As a result, Nvidia is the better growth stock for now, but keeping an eye on Apple to queue up for future investment is also a great idea.