Nvidia (NASDAQ:NVDA) has overtaken Microsoft (NASDAQ:MSFT) to become the most valuable company in the world, just two weeks after claiming the number two spot from Apple (NASDAQ:AAPL).
Nvidia’s stock price surged nearly 4%, surpassing $136 per share, and pushing its market capitalization above $3.35 trillion. In contrast, Microsoft saw a 0.3% decline on Tuesday, bringing its market cap to $3.32 trillion. Nvidia shares have skyrocketed more than 215% over the past 12 months and over 3,400% in the last five years, with a 175% gain in 2024 alone. Meanwhile, Microsoft’s stock has increased by just under 19% this year.
Nvidia first crossed a $1 trillion market cap on June 13, 2023. The stock climbed above $2 trillion on March 1, and then quickly exceeded the $3 trillion mark on June 5. This rapid ascent from $1 trillion to $3 trillion is the fastest on record.
Nvidia’s remarkable rise has significantly influenced the S&P 500, where it now holds a top weighting, helping the index reach record highs in 2024. Until May, the S&P 500 exhibited a near-perfect correlation with Nvidia’s price movements. Nvidia’s stock gains alone have contributed approximately one-third of the S&P 500’s year-to-date rise, according to Citi’s equity research team.
The company’s ascent coincides with the generative AI boom initiated by OpenAI’s ChatGPT platform in late 2022. Nvidia’s chips, modified graphics cards, and CUDA software platform are crucial for training and running AI programs, providing it with a strategic edge over rivals AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC).
Nvidia is the preferred supplier of AI chips and integrated software for tech giants like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), Meta (NASDAQ:META), Microsoft, and Tesla (NASDAQ:TSLA).
During the Computex conference in Taiwan on June 2, CEO Jensen Huang announced the release of a high-powered version of its Blackwell chip, named the Blackwell Ultra, in 2025. This will be followed by a new AI chip platform, Rubin, in 2026, and an Ultra version of Rubin in 2027.
In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, reflecting increases of 461% and 262%, respectively, from the same period last year. The company’s Data Center revenue surged 427% year over year to $22.6 billion, accounting for 86% of its total revenue for the quarter. Nvidia’s gaming segment, previously its most important business, generated $2.6 billion in revenue.
However, AMD and Intel are advancing their own AI chips to challenge Nvidia’s dominance. AMD announced that its MI325X and MI350 will be available in 2024 and 2025, respectively, with its next-generation MI400 AI accelerator platform set for 2026. Intel’s Gaudi 2 and Gaudi 3 AI accelerators aim to undercut competitors on price, appealing to companies spending billions on AI chips.
Nvidia also faces competition from its own customers, as Amazon, Google, and Microsoft seek to reduce their reliance on Nvidia’s chips to save on capital expenditures.
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