In a seismic shift in the tech industry, Nvidia overtook Apple on Wednesday to become the world's second-most valuable company, as the AI chipmaker's valuation topped the $3 trillion mark, buoyed by insatiable demand for its processors that power the emerging field of artificial intelligence.
Nvidia's shares rose 5.2 percent to close at $1,224.40, giving it a market capitalization of $3.12 trillion. The surge overtook Apple, whose market capitalization rose a modest 0.8 percent to $3.003 trillion. Microsoft Corp. (MSFT.O) maintained its lead with a market capitalization of $3.15 trillion.
Nvidia's stock price, up a staggering 147% since the start of 2024, underscores the company's pivotal role in the AI revolution, as tech giants such as Microsoft, Meta and Google parent Alphabet compete for Nvidia's high-performance chips to power their AI capabilities.
This surprising surge follows Nvidia's glowing earnings forecast, released on May 22, which shocked the market and sent the company's shares soaring by nearly 30%. The company's upcoming 1-for-10 stock split on June 7 is expected to further spur interest from retail investors.
Nvidia's dominance reflects a broader trend in tech where AI is emerging as a major battleground. The company's CEO, Jensen Huang, has become a global tech icon, drawing large crowds at events such as the recent Computex trade fair in Taipei.
Meanwhile, Apple faces challenges from slowing iPhone sales and growing competition in the key Chinese market, and some analysts say the tech giant has lagged in integrating AI into its products and services.
Despite its impressive growth, NVIDIA stock remains attractive based on future earnings projections: The company's shares currently trade at 39 times expected earnings, down significantly from a high of more than 70 times expected earnings a year ago.
