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Nvidia has leapfrogged Microsoft and Apple to become the world’s most valuable company, after months of explosive stock price growth, driven by demand for its chips and an investor frenzy over artificial intelligence.
The company’s shares climbed 3.2 percent to $135.18 on Tuesday, bringing its market capitalization to $3.332 trillion and outpacing the two tech giants that have long battled for pole position on U.S. stock markets.
Nvidia has been a major beneficiary of the boom in demand for chips that can train and run powerful generative artificial intelligence models like OpenAI’s ChatGPT. In less than two years, it has gone from a $300 billion company struggling with a chip glut exacerbated by the cryptocurrency slump to one of the most powerful tech companies in the world, with other Silicon Valley giants to back its latest products.
Its huge share price gains alone accounted for about a third of the benchmark S&P 500’s 14 percent year-to-date gain, a rally that shocked even bullish observers.
“These are animal spirits now, taking over human emotion,” said Ted Mortonson, technical strategist at Baird. “Nvidia is a fantastic company, make no mistake. There are a lot of drivers here[for the stock]. . . but 40 percent per month, that’s not normal.”
The Silicon Valley-based company, founded 31 years ago to make PC graphics cards for video game players, has seen consecutive quarters of massive revenue growth in the past year, reporting a 265 percent year-over-year increase in February and a 262 percent increase in 2009 . May. Its shares have risen roughly 170 percent since the beginning of the year.
Nvidia CEO Jensen Huang said the company is at the center of a new “industrial revolution” that unleashes the power of generative artificial intelligence to transform all sectors of the global economy with intelligent computing.
Google, Microsoft, and Amazon have purchased a series of “Hopper” GPUs for their cloud services. Nvidia’s software ecosystem, Cuda, which offers tools for developers using its chips, is consolidating its dominance.
Meanwhile, it is launching its new generation of more powerful “Blackwell” chips, with Huang promising a “one-year rhythm” of new releases. Competitors such as AMD and Intel have launched their own competing AI chips, but they have yet to meaningfully eat into Nvidia’s dominant market share.
“Someone has to be number one, and it’s not like Nvidia’s stock just went up on its own — the financials went up even more,” said Stacy Rasgon, a chip analyst at Bernstein. “I’ve never seen anything like it in terms of the actual economics driving it.” It’s pretty amazing.”
The race to capitalize on opportunities from generative artificial intelligence has swept across the technology sector. At its annual developer conference last week, Apple joined in by announcing that its own suite of generative models would be built into its new operating systems, and signed a major partnership deal with OpenAI.
Nvidia’s growing influence on the broader stock indexes has raised concerns about the long-term sustainability of the market’s growth, but few analysts or investors are predicting a near-term turnaround.
Of the 72 Nvidia analysts tracked by Bloomberg, only one rated the stock a “sell.”
“This spike in the market is really worrying. . . we’re at levels of concentration that we haven’t had since 1999 — that’s problematic,” said Hans Olsen, chief investment officer at Fiduciary Trust, a $23 billion asset manager.
“But if you think about the tech bubble that lasted from 1997 to March 2000, it had a long run.” This one still has a runway,” he added.
Nvidia has joined the dominant duo of Apple and Microsoft, which have been vying for the position of the most valuable company in the US – and often in the world – for more than a decade. The last time a US company was worth more than both was in 2011, when ExxonMobil was the country’s most valuable company.