Nvidia’s market value surpassed $3tn on Wednesday, overtaking Apple as the second most valuable company in the world. This follows a year marked by incredible growth spurred by demand for artificial intelligence chips.
Bloomberg reported that the US chip designer’s stock rose by about 5 percent, putting its market cap ahead of Apple, for the first. The shares ended the day at $3.01tn – marginally ahead Apple’s $3tn. Microsoft surpassed Apple as the world’s most valuable listed company earlier this year.
Investors are flocking to Nvidia’s shares as tech giants such as Google and Microsoft spend billions on its chips. There is no sign that this spending spree of theirs will slow down in the near term.
Nvidia’s data centre chips power the AI models that chief executive Jensen Huang has claimed will spur a new “industrial revolution”, transforming global business with productivity-enhancing features.
In May, the company released another blockbuster earning report, with revenues up by 262 percent year-on-year, largely due to sales of current generation “Hopper’ chips. The company also announced a 10-for-1 stock split that will take effect on June 7th.
Bloomberg data shows that Nvidia is responsible for more than one-third of gains in Wall Street’s benchmark S&P 500 Index this year. This has led to fears of a bubble unsustainable in certain quarters. The S&P500 index rose by 1.2 percent on Wednesday, and has gained 12.3 percent year-to-date.
Nvidia is still not valued at its highest level, despite its bumper earnings. The company’s forecasts have been upgraded repeatedly and it has seen its profits increase.
It was valued on Wednesday at 42 times the expected earnings for the next year. This is up from 23 times earnings in the beginning of the year, and well above Apple’s 29, although it is still below its peak during the first AI hype wave last year.
Stuart Kaiser, Citigroup’s head of US equity strategy, said that the company has an advantage in that it is one of only a few who can prove AI revenue. The higher the stock price and the deeper you go into the revenue cycle, the greater the risk. But so far everything looks clean.
Nvidia remains undisputed as the leader in global technology, offering the most advanced hardware to meet the increasing demands of AI workloads as well as software tools for building AI applications.
Huang promised “a one-year rhythm” for new chips and revealed Nvidia’s “Blackwell” products in March. Huang said that they would generate a “lot” of revenue in this year, sooner than most analysts expected.
Huang teased, in a surprise announcement at the Computex conference in Taiwan over the weekend that the next generation of “Rubin” processors will begin shipping in 2026.
Apple’s annual Worldwide Developers Conference will take place on June 10th. Chief executive Tim Cook will be expected to present the company’s plan for integrating AI-generated features into its products.
Apple has been excluded from the hype surrounding generative AI, which has helped boost shares of its competitors. Apple’s iPhone sales are down on an annual basis, in part due to the resurgence of competition in China.
Cook said that he is “bullish” on Apple’s prospects in AI. Apple shares also recovered after a dip at the beginning of the year. Apple announced a $110bn buyback, which was larger than expected.
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