Nvidia Corporation, a leading name in the semiconductor industry, has ascended to the pinnacle of global market value, surpassing tech giants Microsoft and Apple. With a market capitalization of approximately $3.33 trillion, Nvidia has become the world’s most valuable publicly traded company, fueled by a remarkable surge in demand for its AI chips.
A Remarkable Ascent For Nvidia
The stock price of Nvidia rose 3.4% on Tuesday, June 18, propelling its market cap beyond that of Microsoft and Apple. Earlier this month, Nvidia had overtaken Apple to claim the second spot for the first time since 2002. The race for the top position has been fierce, with Nvidia ultimately securing the lead. Nvidia’s stock has skyrocketed by 173% so far this year, compared to a modest 19% rise in Microsoft’s shares.
“AI is the new electricity,” said Jensen Huang, CEO of Nvidia. “Our mission is to enable the world to achieve what was previously unimaginable. We’re not just selling chips; we’re selling systems that transform industries.”
The surge in Nvidia’s market value is emblematic of the current AI-driven frenzy on Wall Street. Nvidia’s high-end processors are in great demand as tech giants like Microsoft, Meta Platforms, and Alphabet race to enhance their AI computing capabilities. Sam North, a market analyst at investment platform eToro, noted, “A stock split can reduce the price per share, making it more affordable for individual investors to buy. With Nvidia doing a 10:1 stock split, retail investors are the real winners here.”
Oliver Pursche, senior vice president at Wealthspire Advisors, added a note of caution: “Nvidia 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.”
Nvidia’s financial performance has been nothing short of stellar. The company’s revenue more than tripled to $26 billion in the latest quarter, with net income soaring seven-fold to $14.9 billion. Revenue for the current fiscal year is expected to roughly double to $120 billion and rise another 33% to $160 billion in fiscal 2026, according to LSEG data.
The company’s journey from a market value of $1 trillion to $2 trillion took just nine months, with the leap from $2 trillion to $3 trillion occurring in just over three months. In comparison, Microsoft and Apple took significantly longer to achieve similar growth milestones.
Nvidia’s dominance in the AI sector is attributed to its superior chips, which power many AI tools, including OpenAI’s ChatGPT. The company’s AI processors, such as the H100 accelerators, are highly sought after, with prices per unit reaching around $30,000. This has led to a significant increase in Nvidia’s revenue and market valuation.
Michael Lippert, vice president and portfolio manager at Baron Capital Inc., emphasized, “They’re not just selling chips, they’re selling systems. Nvidia’s proprietary software and development ecosystem are key differentiators.”
Nvidia continues to innovate with platforms like Blackwell and Rubin. The Blackwell platform aims to make real-time generative AI possible on trillion-parameter large language models, promising to reduce cost and energy use by up to 25 times compared to previous platforms. The Rubin platform, introduced at Computex 2024, includes new GPUs and a central processor called ‘Vera,’ expected to be available to customers later in 2024.
Nvidia’s rise to the top of the global market is a testament to its strategic focus on AI and continuous innovation. As AI technology becomes increasingly central to the global economy, Nvidia’s position as a leader in this space is expected to grow stronger. However, the company must navigate the challenges and competition in this rapidly evolving industry to maintain its position at the summit. As Daniel Ives of Wedbush Securities aptly put it, “Nvidia’s GPU chips are in essence the new gold or oil in the tech sector. The race to $4 trillion market cap in tech will be front and centre between Nvidia, Apple, and Microsoft.”
