Nvidia soared to record highs on Wednesday, surpassing a $3 trillion valuation and overtaking Apple to become the world's second most valuable company. The surge in Nvidia's market value above Apple's marks a significant shift in Silicon Valley's landscape.
Nvidia's stock rose 5.2% to close at $1,224.40, valuing the company at $3.012 trillion, while Apple's market capitalization was last at $3.003 trillion after its stock climbed 0.8%. Despite this, Microsoft retained its position as the world's most valuable company, with a market capitalization of $3.15 trillion.
Nvidia's impending ten-for-one stock split, effective on June 7, is anticipated to enhance its appeal to individual investors. The company's success in capitalizing on artificial intelligence (AI) has played a pivotal role in its remarkable ascent. Demand for its top-of-the-line processors has far exceeded supply, particularly as tech giants like Microsoft, Meta Platforms, and Alphabet compete to bolster their AI computing capabilities.
Nvidia's stock has surged by 147% in 2024, with a nearly 30% increase since May 22 following its latest impressive revenue forecast. The optimism surrounding AI has also lifted chip stocks broadly, with the PHLX chip index surging by 4.5%. Super Micro Computer, a company that sells AI-optimized servers built with Nvidia chips, climbed 4%.
Nvidia CEO Jensen Huang's prominence has grown significantly amid the company's success. He was recently the subject of extensive coverage on Taiwanese television and was enthusiastically received at the Computex tech trade fair in Taipei, his birthplace.
Meanwhile, Apple faces challenges such as weak demand for iPhones and stiff competition in China. Some investors perceive Apple as lagging behind other tech giants in integrating AI features into their products and services.
Although Nvidia's stock gains have been stellar, analysts project even stronger future earnings, indicating that the company may continue to outperform. Despite its remarkable valuation, Nvidia's current trading multiple of 39 times expected earnings is lower than it was a year ago, reflecting its relative affordability compared to previous levels.
3.5
