Nvidia Earned About Twice as Much as Apple Last Quarter. Its Stock Is Worth Only About 20% More.

Nvidia (NASDAQ:NVDA) now out-earns Apple (NASDAQ:AAPL) by a large margin. The artificial intelligence (AI) chip leader posted net income of $59.7 billion for its fiscal second quarter of 2027 (ended July 26, 2026). Apple earned $29.8 billion in its fiscal third quarter of 2026 (ended June 27, 2026), about half as much.

But the stock market values the two far more closely. With Nvidia's shares near a record high at roughly $242 as of this writing, its market cap is about $5.8 trillion. Apple, at about $333 a share, is worth about $4.9 trillion.

Nvidia's market value, in other words, is only about 20% bigger than Apple's, even though its latest quarterly profit was about 100% bigger. I think this gap says less about Apple than about how much the market trusts Nvidia's earnings to last.

Image source: Getty Images.

A gap that opened fast

Showing how quickly this happened, Nvidia's net income for the same quarter a year before was $26.4 billion. Apple earned $23.4 billion in its June 2025 quarter, so Nvidia's edge was only about 13%.

Since then, Nvidia's quarterly net income is up 126% year over year, while Apple's climbed 27%. It was a strong year for Apple. But Nvidia's earnings more than doubled.

Sure, a single quarter can flatter one side. Nvidia's GAAP net income includes gains on its investments in other companies' shares, which added $7.8 billion before tax last quarter. Stripping those out, along with a few smaller items, its non-GAAP (adjusted) net income was $54.0 billion, an 18% rise from the prior quarter.

Apple got a boost, too. Tariff refunds added $0.11 to its earnings per share, or about $1.6 billion. Remove both, and Nvidia still earned almost twice as much as Apple.

Apple's June quarter also isn't its largest.

Over the last 12 months, Nvidia's net income was around $192.9 billion, versus about $128.9 billion for Apple -- around 50% higher. The gap narrows by that measure because the period covers Apple's holiday quarter, when it made $42.1 billion, and two earlier Nvidia quarters when its profit was lower.

Either way, Nvidia's profit lead is far bigger than its lead in market value.

Apple's profits are much steadier

The biggest reason is probably durability. Apple's earnings usually hold up even in a weak year. Its net income dropped only around 3% for fiscal 2023 (ended in September 2023). But Nvidia's net income fell 55% to $4.4 billion for its own fiscal 2023, which finished in January 2023.

Much of Apple's steadiness comes from services like the App Store and iCloud. Services revenue grew 12% year over year to $30.7 billion for fiscal Q3, or around 28% of Apple's total sales. And the gross margin on this revenue was about 76%, close to Nvidia's 75% companywide gross margin last quarter.

"Our installed base of active devices also reached a new all-time high across all major product categories and geographic segments," said Kevan Parekh, Apple's chief financial officer, in the company's fiscal third-quarter earnings release.

Nvidia's profits rest on a narrower base. Data center sales (mainly AI chips and the networking gear that connects them) made up $89.0 billion of its $96.2 billion in fiscal second-quarter revenue.

And just three direct customers accounted for 16%, 15%, and 13% of Nvidia's total revenue in the six months through July 26, according to its last quarterly filing. If a few big buyers slow their spending, Nvidia's earnings may drop quickly.

Is the discount too big?

On the last 12 months of GAAP earnings, Apple stock trades at around 38 times earnings, while Nvidia trades at about 30 times earnings. The gap's wider on expected profits. Apple trades at around 35 times its expected earnings for fiscal 2027, based on analysts' consensus estimate. Nvidia trades at about 15 times expected earnings for its fiscal 2028, the year ending January 2028.

At Apple's 38 times earnings, Nvidia's market cap would be supported by around $152 billion of yearly profit. That number is about 20% less than Nvidia made in the past year, and well below its pace last quarter. In other words, Nvidia's profit could drop by around a fifth, and its stock would still cost no more relative to earnings than Apple's does now.

Nvidia's earnings could fall further than that, of course. They did in fiscal 2023, and spending on AI data centers might not keep growing in a straight line. But I think Nvidia's stock price already accounts for a lot of that risk.

In the end Apple's steadier profits deserve some premium. For investors deciding between the two at today's prices, though, I think Nvidia offers more profit per dollar even if its profits are likely to be lumpier.

Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool has a disclosure policy.