Nvidia Surpasses Microsoft as Most Valuable Company
On Tuesday, Nvidia overtook Microsoft as the most valuable company, due to its high-end processors crucial for AI dominance.
In a few days, Nvidia’s shares surged 3.5% to $135.58, boosting its valuation to $3.335 trillion and surpassing Apple.
Microsoft’s shares fell 0.45%, lowering its value to $3.317 trillion. Meanwhile, Apple’s market cap dropped over 1% to $3.286 trillion.
Nvidia’s market cap surge symbolizes Wall Street’s AI-driven panic and optimism over the past 12 months.
Though the S&P 500 and Nasdaq hit highs with Nvidia’s surge, investors worry AI excitement may fade if spending slows.
“It’s Nvidia’s market; we’re all just trading in it,” stated Interactive Brokers chief market strategist Steve Sosnick.
Surge in Trading and AI Demand Boosts Nvidia
According to LSEG data, Nvidia has emerged as Wall Street’s most traded business, with a $50 billion daily turnover, surpassing Apple, Microsoft, and Tesla.
Currently, the chip manufacturer represents roughly 16% of total S&P 500 company trading.
Although Microsoft’s stock rose 19% this year, Nvidia’s price nearly tripled due to high demand for its top-tier processors.
Alphabet, Microsoft, and Meta are competing to develop AI capabilities and integrate the technology into their products and services.
Due to high demand, Nvidia’s superior AI chips face shortages, making it the top beneficiary of the AI boom.
“Nvidia has been getting a lot of positive attention and has been doing a lot of things very correctly, but a small misstep is likely to cause a major correction in the stock, and investors should be careful,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York.
Nvidia’s market value surged, reaching a record high, up nearly $110B, equivalent to Lockheed Martin’s value.
In nine months, market worth rose from $1T to $2T in February, then surged to $3T by June.
Despite supply shortages, Nvidia consistently exceeds revenue expectations, driven by AI integration.
In May, Nvidia executives stated that demand for their Blackwell AI processors would outpace supply “well into next year.”
Nvidia’s stock surged, yet faster earnings projections led to a decline in valuation.
Recently, Nvidia’s trading at 44 times forecast earnings, a drop from over 84 a year prior.
Nvidia divided its shares 10 for 1 last week, making its highly valued stock more appealing to individual investors.
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