Nvidia eclipses Microsoft as world鈥檚 most valuable company
NVIDIA became the world鈥檚 most valuable company on Tuesday, dethroning tech heavyweight Microsoft as its high-end processors play a central role in a scramble to dominate artificial intelligence (AI) technology.
Shares of the chipmaker climbed 3.5% to $135.58, lifting its market capitalization to $3.335 trillion, just days after overtaking iPhone maker Apple to become the second-most valuable company.
Microsoft鈥檚 stock market value was $3.317 trillion as its shares dipped 0.45%.
Apple鈥檚 stock slipped over 1%, leaving its value at $3.286 trillion.
Nvidia鈥檚 stunning surge in market value over the past year has become emblematic of a Wall Street frenzy driven by optimism about emerging AI technology.
While Nvidia鈥檚 rally has lifted the S&P 500 and the Nasdaq to record highs, some investors worry that unbridled optimism about AI could evaporate if signs emerge of a slowdown in spending on the technology.
鈥淚t鈥檚 Nvidia鈥檚 market; we鈥檙e all just trading in it,鈥 said Steve Sosnick, chief market strategist at Interactive Brokers.
Nvidia has also become by far the most traded company on Wall Street, with daily turnover recently averaging $50 billion, compared to around $10 billion each for Apple, Microsoft, and Tesla, according to London Stock Exchange Group (LSEG) data. The chipmaker now accounts for about 16% of all trading in S&P 500 companies.
Nvidia鈥檚 stock has nearly tripled so far this year, compared with a rise of about 19% in Microsoft shares, with demand for its top-of-the-line processors outpacing supply.
Tech giants Microsoft, Meta Platforms, and Google owner Alphabet are competing to build out their AI computing capabilities and add the technology to their products and services.
An insatiable appetite for Nvidia鈥檚 AI processors, viewed as far superior to competitors鈥 offerings, has left them in tight supply, and many investors view Nvidia as the greatest winner to date from surging AI development.
鈥淣vidia has been getting a lot of positive attention and has been doing a lot of things very correctly, but a small misstep is likely to cause a major correction in the stock, and investors should be careful,鈥 said Oliver Pursche, senior vice-president at Wealthspire Advisors in New York.
Tuesday鈥檚 gain lifted Nvidia鈥檚 stock to a record high and added over $110 billion to its market capitalization, equivalent to the entire value of Lockheed Martin.
The company鈥檚 market value expanded from $1 trillion to $2 trillion in just nine months in February, while taking just over three months to hit $3 trillion in June.
Since its blowout forecast about a year ago, the company has consistently breezed past Wall Street鈥檚 lofty expectations for revenue and profit, with demand for its graphics processors far outstripping supply as companies rush to embed AI applications.
Nvidia executives said in May that demand for its Blackwell AI chips could exceed supply 鈥渨ell into next year.鈥
Sharp increases in analysts鈥 expectations for Nvidia鈥檚 future earnings have outpaced its stellar stock gains, resulting in a fall in the stock鈥檚 earnings valuation.
Nvidia recently traded at 44 times expected earnings, down from over 84 about a year ago, LSEG data showed.
Increasing the appeal for its highly valued stock among individual investors, Nvidia last week split its stock 10-for-one. 鈥 Reuters
