Nvidia Surpasses Microsoft to Become World’s Most Valuable Company

Nvidia Surpasses Microsoft

Nvidia has become the world’s most valuable company, overtaking Microsoft, thanks to the pivotal role its high-end processors play in the race to dominate AI technology. Nvidia’s shares rose by 3.5% to $135.58, pushing its market capitalization to $3.335 trillion.

This comes shortly after it surpassed Apple to become the second most valuable company. In contrast, Microsoft’s market value is now $3.317 trillion after a slight dip in its share price, and Apple’s stock dropped over 1%, leaving its value at $3.286 trillion.

Nvidia’s rapid rise in market value over the past year highlights a Wall Street frenzy fueled by enthusiasm for AI technology. Although Nvidia’s rally has driven the S&P 500 and Nasdaq to record highs, some investors are concerned that the AI hype might diminish if spending on the technology slows down. “It’s Nvidia’s market; we’re all just trading in it,” said Steve Sosnick, chief market strategist at Interactive Brokers.

Currently, Nvidia is the most traded company on Wall Street, with a daily turnover averaging $50 billion, significantly higher than the $10 billion for Apple, Microsoft, and Tesla. Nvidia now represents about 16% of all trading in S&P 500 companies.

This year, Nvidia’s stock has nearly tripled, compared to a 19% rise in Microsoft’s shares, driven by the high demand for its processors. Tech giants like Microsoft, Meta Platforms, and Alphabet are competing to enhance their AI capabilities, relying heavily on Nvidia’s superior processors, which are in short supply.

Many investors see Nvidia as the biggest beneficiary of the AI boom so far. However, Oliver Pursche, senior vice president at Wealthspire Advisors, cautions that even a small misstep could lead to a significant correction in the stock.

Nvidia Stock Just Set a New Record

Nvidia’s recent gains set a new record for its stock, adding over $110 billion to its market value, equivalent to the entire value of Lockheed Martin. The company’s market value grew from $1 trillion to $2 trillion in just nine months and reached $3 trillion in a little over three months.

Since a significant forecast about a year ago, Nvidia has consistently exceeded Wall Street’s high expectations for revenue and profit. The demand for its graphics processors continues to outpace supply as companies rush to integrate AI applications. Nvidia executives have indicated that demand for its Blackwell AI chips might exceed supply well into next year.

Despite Nvidia’s stellar stock performance, sharp increases in analysts’ earnings expectations have outpaced these gains, causing a decline in the stock’s earnings valuation. Nvidia recently traded at 44 times expected earnings, down from over 84 a year ago.

To attract more individual investors, Nvidia recently implemented a 10-for-one stock split.

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