Nvidia stock vs. Apple stock: Billionaires buy one and sell the other

Nvidia (NVDA -2.60%) And Apple (AAPL 0.85%) are two of the most popular stocks among retail investors, but the billionaires listed below bought one and sold the other in the third quarter.

• Cliff Asness of AQR Capital Management bought 719,710 shares of Nvidia, increasing his stake by 5%. He also sold 102,651 Apple shares, reducing his stake by 1%. Nvidia is now the largest holding in the portfolio and Apple is the second largest.
• Steven Cohen of Point72 Asset Management bought 1.5 million shares of Nvidia, increasing his stake by 75%. He also sold 1.5 million Apple shares, completely exiting the position. Importantly, Nvidia is now the largest holding in the portfolio, excluding options contracts.

Investors should pay close attention to the trades made by Steven Cohen. According to LCH Investments, Point72 is among the top 15 hedge funds based on net gains since inception. However, the above deals were made in the third quarter that ended in September. So here’s what investors need to know about Nvidia and Apple now.

Nvidia: The stock that some hedge funds run by billionaires bought

Nvidia is the foundation of 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, according to several analysts, the company has over 80% market share in AI accelerators.

What investors may not know is that Nvidia’s dominance in the AI ​​accelerator market rests not only on the superior performance of its chips, but also on the breadth of its CUDA software platform. CUDA includes hundreds of code libraries and pre-trained models that streamline the development of AI applications across 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. You also need to create a robust software development ecosystem that can compete with CUDA. But that’s easier said than done. Nvidia has been developing its CUDA platform for almost two decades. This means the company is well positioned to maintain its market leadership in AI accelerators.

Nvidia reported exceptional financial results in the third quarter of fiscal 2025. Revenue rose 94% to $35 billion and non-GAAP net income jumped 103% to $0.81 per diluted share. This was the sixth consecutive quarter in which Nvidia 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 price target of $175 per share, representing a 25% upside from the current share price of $140.

Apple: The stock that some hedge funds run by billionaires sold

Apple has a key competitive advantage in brand authority, which in turn forms the basis of pricing power. For example, the average iPhone sold for more than $900 in the third quarter, while the average Samsung Android phone sold for less than $300. 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 industries. The company ranks fourth in personal computer (PC) shipments, first in smartwatch shipments, and first in tablet shipments. As Apple monetizes consumers with devices, the company also generates higher margins by providing adjacent services such as App Store downloads, iCloud storage and Apple Pay, as well as subscriptions such as Apple TV+.

Apple is a major player in several of these services markets. For example, the App Store is the highest-grossing mobile app store and its revenue is growing faster than its nearest competitor. alphabetis in 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 revenue and profit. Total revenue rose 6% to $95 billion, and sales in its two main product categories – iPhone and services – rose 6% and 12%, respectively. Meanwhile, non-GAAP earnings rose 12% to $1.64 per diluted share.

Looking ahead, Wall Street expects Apple’s adjusted earnings to rise 10% over the next 12 months. This consensus forecast makes the current valuation of 36 times adjusted earnings look very expensive. These numbers give Apple a price-to-earnings-growth (PEG) ratio of 3.6, making the stock significantly more expensive than Nvidia, which has a PEG ratio of just over 1.

For this reason, I think potential investors should avoid Apple at this time and current shareholders should consider reducing large positions.