Nvidia has ascended to the pinnacle of the corporate world, dethroning tech heavyweight Microsoft to become the world’s most valuable company. The chipmaker’s shares grew by 3.5 per cent to USD 135.58, boosting its market capitalisation to USD 3.335 trillion.
This comes just days after Nvidia overtook Apple to secure the position of the second most valuable company, leaving Microsoft’s market value at USD 3.317 trillion and Apple’s at USD 3.286 trillion after slight declines in their stock prices.
The remarkable rise in Nvidia’s market value over the past year has been emblematic of Wall Street’s enthusiasm for emerging AI technology. Nvidia’s high-end processors have become central in the race to dominate AI, driving a frenzy that has lifted the S&P 500 and Nasdaq to record highs. However, some investors are cautious, fearing that the current optimism could wane if there is a slowdown in spending on AI technology.
Nvidia’s stock has nearly tripled this year, a stark contrast to the 19 per cent rise in Microsoft shares, highlighting the intense demand for Nvidia’s superior AI processors.
Nvidia has now become the most traded company on Wall Street, with an average daily turnover of USD 50 billion, compared to about USD 10 billion for Apple, Microsoft, and Tesla. This trading volume represents approximately 16 per cent of all trading in S&P 500 companies. The insatiable appetite for Nvidia’s AI processors, viewed as superior to competitors’ offerings, has left them in tight supply. Many investors see Nvidia as the biggest winner so far in the AI development surge.
In just nine months, Nvidia’s market value doubled from USD 1 trillion to USD 2 trillion, and then it took just over three months to reach USD 3 trillion. Since a major forecast about a year ago, Nvidia has consistently surpassed Wall Street’s high expectations for revenue and profit, with demand for its graphics processors far outstripping supply as companies rush to integrate AI applications. Nvidia executives indicated in May that demand for their Blackwell AI chips could exceed supply well into next year.
Despite its stellar stock performance, Nvidia’s valuation has become more attractive. The company’s price-to-earnings ratio recently dropped to 44 times expected earnings, down from over 84 a year ago. Nvidia’s recent 10-for-one stock split has further increased its appeal among individual investors.
(Inputs from Reuters)
