Apple (NASDAQ: AAPL) is the most valuable company in the world right now with a market cap of $3.4 trillion. But a closer look at the company's recent financial performance indicates that it is finding it difficult to put its growth into a higher gear.

For instance, in the third quarter of fiscal 2024 (which ended on June 29), Apple's revenue increased just 5% year over year to $85.8 billion. Analysts are expecting this "Magnificent Seven" stock to finish the year with a 9% increase in revenue to $390 billion. Additionally, its revenue is expected to increase by just 8% in the next fiscal year.

This lukewarm growth at Apple can be attributed to the company's already massive revenue base. Moreover, Apple's bread-and-butter end market of smartphones is already quite huge, and its growth has stagnated. Market research firm IDC estimates that the global smartphone market could reach an annual growth rate of just 2.3% through 2028.

Considering that Apple is reliant on the iPhone for 52% of its revenue, it is not surprising to see that it's not expected to grow at a blistering pace anymore. This is precisely the reason Apple could lose its crown as the world's most valuable company to Nvidia (NASDAQ: NVDA), a company that is sitting on lucrative and fast-growing end markets that could help it deliver impressive growth over the next decade.

Let's look at the reasons why Nvidia could be worth more than Apple after a decade.

Nvidia is set to benefit from massive growth opportunities in multiple end markets

Nvidia is currently the third-most valuable company in the world with a market cap of $2.85 trillion, which means that it is not very far from catching Apple. The terrific pace at which Nvidia has been growing tells us that it can indeed catch the iPhone maker over the next decade.

The company, which is known for its graphics processing units (GPUs), reported phenomenal revenue growth of 122% in the second quarter of fiscal 2025 to $30 billion. Nvidia has been riding the artificial intelligence (AI) wave, with its chips being deployed for training popular AI models such as ChatGPT. And now, Nvidia is diversifying into areas beyond AI training so that it can sustain its handsome growth for a long time to come.

For instance, on its August earnings conference call, Nvidia management pointed out that AI inference applications have accounted for more than 40% of its data center revenue. This is an important trend to note as inference is the process of using a trained AI model to generate results from a fresh set of data. So, Nvidia has moved beyond AI training and is now getting a nice chunk of revenue from the AI inferencing space as well.

That's good news for the company's long-term prospects as its presence in both these markets should allow it to remain a dominant force in AI chips. Investors should note that the market for AI chips is expected to generate $300 billion in revenue in 2034, growing at an annual rate of 22% over the next decade.

Nvidia reportedly controls 70% to 95% of the AI chip market, according various estimates, leaving very little for rivals such as Advanced Micro Devices and Intel. It won't be surprising to see that trend continue over the next decade as well, as a result of which Nvidia could sustain its elevated levels of growth for a long time to come.

Additionally, Nvidia is diversifying into lucrative markets such as AI enterprise software, where it has started witnessing impressive growth. This could unlock another lucrative growth opportunity for the company as the AI software market is expected to generate a whopping $1 trillion in revenue by 2032, according to Precedence Research.

Then again, Nvidia has other solid growth drivers in the form of the nascent but potentially massive cloud gaming space where it has already established a solid position for itself. All this explains why the company is forecast to grow at a much faster pace than Apple.

Faster growth could help the chipmaker overtake Apple's market cap

Analysts are expecting Apple's earnings to increase at a compound annual growth rate (CAGR) of 11% over the next five years. There is a chance that the iPhone maker's earnings growth could accelerate in the long run thanks to the growing contribution of the company's high-margin services business, but it is likely to be hamstrung by the slow pace of growth in smartphone sales over the next decade.

Precedence Research estimates that the global smartphone market could see 7% annual growth through 2034. While that's rosier than IDC's forecast, Precedence believes that the adoption of technologies such as augmented reality and virtual reality are likely to help the smartphone market achieve faster growth. But it is worth noting that these technologies have been around for some time and they haven't been enough to inject life into the smartphone market.

On the other hand, the advent of AI turned out to be a massive catalyst for Nvidia. Analysts are forecasting the company's earnings to increase at a CAGR of 52% over the next five years, a much faster pace than what Apple is expected to report. Moreover, Nvidia's end markets are set to grow at a much faster pace than Apple's, and the good part is that the company is the dominant player in most of those markets.

So, there is a good chance that Nvidia could outperform Apple's growth by a big margin over the next decade, and the market could reward the former with more upside as a result and help it become a more valuable company.

Should you invest $1,000 in Nvidia right now?

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.

Prediction: 1 Stock That Will Be Worth More Than Apple 10 Years From Now was originally published by The Motley Fool