Nvidia Surpasses Microsoft: Reigning Champion in AI Chip Market

Nvidia has surpassed Microsoft to become the world's most valuable company, driven by surging demand for its AI processors. With its market value reaching $3.336 trillion, Nvidia commands over 80% of the AI chip market, significantly outpacing both Microsoft and Apple in stock performance.

Nvidia became the world's most valuable company on Tuesday, dethroning tech heavyweight Microsoft as its high-end processors play a central role in a race to dominate a surge in artificial intelligence technology. Shares of the chipmaker climbed 3.5% to $135.60, lifting its market capitalization to $3.336 trillion, just days after overtaking iPhone maker Apple to become the second most valuable company.

Microsoft's stock market value was $3.325 trillion as its shares dipped 0.2%. Apple's stock slipped 1.3%, putting its value at $3.278 trillion.

Nvidia's stock has surged about 173% so far this year, compared with a rise of about 19% in Microsoft shares, with demand for its top-of-the-line processors outpacing supply. Tech giants Microsoft, Meta Platforms and Google-owner Alphabet are competing to build out their AI computing capabilities and dominate the emerging technology. Tuesday's gain lifted Nvidia's stock to a record high and added over $103 billion to its market capitalization. Nvidia commands more than 80% of the market share for AI chips, making it a major winner from surging AI development. Since its blowout forecast about a year ago, the company has consistently breezed past Wall Street's lofty expectations for revenue and profit, with demand for its graphics processors far outstripping supply as companies rush to embed AI applications.

Nvidia executives said in May that demand for its Blackwell AI chips could exceed supply "well into next year." Increasing the appeal for its highly valued stock among individual investors, Nvidia recently split its stock 10-for-one, effective June 7. "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," said Sam North, market analyst at investment platform eToro.

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. 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 is trading at 44 times expected earnings, down from over 84 times expected earnings about a year ago, LSEG data showed.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)