Nvidia has become the world’s most valuable company, overtaking tech giant Microsoft. It is due to the crucial role its high-end processors play in the AI technology race.
Nvidia’s shares rose 3.7 percent to $135.87, pushing its market capitalization to $3.341 trillion. This happened shortly after it surpassed Apple to become the second most valuable company. In comparison, Microsoft’s market value was $3.314 trillion with a 0.5 percent dip in shares, and Apple’s value fell to $3.280 trillion with a 1.2 percent decrease.
Nvidia’s significant market value increase over the past year represents Wall Street’s excitement about AI technology. This surge has boosted the S&P 500 and Nasdaq to record highs, although some investors fear the AI hype might fade if spending slows.
“It’s Nvidia’s market; we’re all just trading in it,” said Steve Sosnick, chief market strategist at Interactive Brokers.
Nvidia is now the most traded company on Wall Street, with daily turnover averaging $50 billion. This is in stark contrast to about $10 billion each for Apple, Microsoft, and Tesla, according to LSEG data. Nvidia accounts for about 16 percent of all trading in S&P 500 companies.
Nvidia’s stock has nearly tripled this year, compared to a 19 percent rise in Microsoft shares, driven by strong demand for its top-tier processors. Tech giants like Microsoft, Meta Platforms, and Alphabet are expanding their AI capabilities and integrating the technology into their products.
Nvidia’s AI processors, seen as superior to competitors, are in tight supply, making the company a significant winner in the AI boom.
“Nvidia has been getting a lot of positive attention and has been doing many things correctly, but a small misstep could cause a major correction in the stock, and investors should be cautious,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York.
Tuesday’s stock gain lifted Nvidia to a record high, adding over $100 billion to its market cap. The company’s market value grew from $1 trillion to $2 trillion in nine months and reached $3 trillion in just over three months.
Since its impressive forecast about a year ago, Nvidia has consistently exceeded Wall Street’s high expectations for revenue and profit, with demand for its graphics processors far outpacing supply as companies rush to incorporate AI applications.
Nvidia executives stated in May that demand for its Blackwell AI chips could exceed supply “well into next year.”
Analysts’ expectations for Nvidia’s future earnings have increased sharply, outpacing its stock gains and resulting in a lower earnings valuation. Nvidia recently traded at 44 times expected earnings, down from over 84 a year ago, according to LSEG data.
To make its stock more attractive to individual investors, Nvidia recently split its stock 10-for-one.
