SAN FRANCISCO, Thursday, June 20, 2024- In a significant shift within the technology sector, chipmaker Nvidia on Tuesday surpassed Microsoft to become the world’s most valuable company by market capitalization.1
In June first week Tesla CEO Elon Musk also pledged that he would buy USD 9 bn worth of chips from Nvidia.
On June 13, Apple briefly claimed the title of the most valuable U.S. company after unveiling new generative AI features for the iPhone at its annual Worldwide Developers Conference, boosting its stock. However, Apple’s market cap fell below Microsoft’s again the following day.
Nvidia’s share price rose 3.5% to $135.58, pushing its market capitalization to $3.335 trillion. This surge eclipsed Microsoft’s market value of $3.317 trillion.
The rise of Nvidia reflects the growing importance of semiconductors in powering artificial intelligence, data centers, and the gaming industry.
Nvidia’s graphics processing units (GPUs) are a key component in these sectors.
Microsoft, however, remains a dominant force in software and cloud computing. While the company’s stock price has dipped slightly this year, its long-term prospects remain strong.
Nvidia has shown remarkable performance recently, with its stock surging by about 725% since January 2023.
This rise is driven by substantial growth in its data center business, where revenue has quintupled in the past year, boosting net income by over 600%.
Nvidia’s dominance is partly fueled by the burgeoning field of Artificial Intelligence. Its powerful GPUs are seen as ideally suited for the complex calculations required by Large Language Models (LLMs) and advanced chatbots, propelling them to the forefront of this rapidly growing market.
This demand for AI-optimized hardware has significantly boosted Nvidia’s stock price and market value.
According to a Reuters report the company’s market value expanded from $1 trillion to $2 trillion in just nine months in February, while taking just over three months to hit $3 trillion in June.
“Nvidia executives said in May that demand for its Blackwell AI chips could exceed supply “well into next year.”
“Sharp increases in analysts’ expectations for Nvidia’s future earnings have outpaced its stellar stock gains, resulting in a fall in the stock’s earnings valuation.
“Nvidia recently traded at 44 times expected earnings, down from over 84 about a year ago, LSEG data showed,” the report said.2
While data center sales are soaring, Nvidia’s automotive segment is also emerging as a potential major revenue driver.
Automakers like Rivian, BYD, Nio, XPeng, Volvo, Polestar, and Mercedes-Benz are incorporating Nvidia’s DRIVE Orin processors to enhance vehicle performance.
Read
Nvidia’s 591,078% Rally to Most Valuable Stock Came in Waves.
- CNN.com: https://edition.cnn.com/2024/06/18/markets/nvidia-largest-public-company/index.html[↩]
- reuters.com: https://www.reuters.com/markets/us/nvidia-becomes-worlds-most-valuable-company-2024-06-18/[↩]
