Currently, Apple is the most valuable publicly traded company, with a market value of $3.6 trillion. However, the average target prices set by Wall Street analysts imply Nvidia (NVDA 1.58%) and Microsoft (MSFT 1.57%) will surpass that figure in the next year, which gives the companies a good shot at topping $3.6 trillion before the end of 2025.
- Among the 68 analysts following Nvidia, the average target price is $175 per share. That implies 30% upside from its current share price of $134. It also implies a market value of $4.3 trillion.
- Among the 58 analysts following Microsoft, the average target price is $510 per share. That implies 25% upside from its current share price of $408. It also implies a market value of $3.8 trillion.
Here is what investors should know about these artificial intelligence stocks.
NASDAQ: NVDA
Key Data Points
Nvidia: 30% upside implied by Wall Street's average target price
Nvidia dominates the market for data center graphics processing units (GPUs), semiconductors used to accelerate complex workloads like scientific computing and artificial intelligence (AI). Analysts estimate Nvidia GPUs account for more than 80% of AI accelerator sales. And AI accelerator spending is projected to increase at 29% annually through 2030, according to Grand View Research.
Nvidia will likely concede some market share as companies explore custom AI solutions from Broadcom, but analysts generally expect the chipmaker to maintain its dominant position for many years. By 2030, Vivek Arya at Bank of America estimates Nvidia will still account for 75% of AI accelerator sales, and Christopher Rolland at Susquehanna puts that figure at 77%.
Nvidia reported financial results for the third quarter of fiscal 2025 that exceeded estimates on the top and bottom lines. Revenue increased 94% to $35 billion, and non-GAAP (generally accepted accounting principles) earnings soared 103% to $0.81 per diluted share. That was the sixth straight quarter in which Nvidia recorded triple-digit earnings growth. "The age of AI is in full steam, propelling a global shift to Nvidia computing," said CEO Jensen Huang.
Wall Street estimates Nvidia's earnings will increase 49% over the next year. That makes the current price-to-earnings (P/E) multiple of 53 looks relatively cheap, and it's well below the average P/E ratio of 62 in the past year. From that starting point, the average target price of $175 per share is very plausible, meaning Nvidia could easily top Apple's current market value before the end of 2025.
NASDAQ: MSFT
Key Data Points
Microsoft: 25% upside implied by Wall Street's average target price
Microsoft is the largest enterprise software company and the second-largest public cloud, as measured by revenue. The company is exploiting its strong presence in those markets to monetize artificial intelligence. For example, Microsoft 365 Copilot is a generative AI assistant embedded in applications like Word, Excel, and Teams, and Copilot Studio lets businesses design custom AI agents.
Similarly, Microsoft Azure AI is a suite of cloud services that facilitates the development of AI applications. One component is particularly important. Through Azure OpenAI Service, the company provides access to large language models (LLMs) from OpenAI, including those that power ChatGPT. Developers can fine-tune those LLMs to build custom generative AI applications like customer service chatbots and sales assistants.
Microsoft reported reasonably good financial results in the second quarter of fiscal 2025, beating estimates on the top and bottom lines. Revenue increased 12% to $69.6 billion, and GAAP earnings increased 10% to $3.23 per diluted share. "Our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year over year," said CEO Satya Nadella.
Wall Street expects Microsoft's earnings to grow 13% during the next year. Comparatively, the current valuation of 33.5 times earnings is reasonable. In fact, shares have not been that cheap at any point during the previous 15 months, meaning investors have an unusually compelling opportunity to purchase a stock that typically trades at a premium.
Additionally, from the current valuation, the average target price of $510 per share -- which puts Microsoft's market value at $3.8 trillion, above Apple's current market value of $3.6 trillion -- seems like a very plausible outcome if the company meets or exceeds Wall Street's earnings estimates in the next few quarters.
