Nvidia Surpasses Apple as Second Most Valuable Company
The surge in Nvidia's stock reflects a wider trend of growing investor confidence in firms benefiting from AI technology.
Nvidia, the leading artificial intelligence (AI) chipmaker, has surged to new record highs, with its market valuation breaching the $3 trillion mark, overtaking Apple to become the world's second most valuable company.
On Wednesday, Nvidia's stock increased by 5.2%, closing at $1,224.40, which boosted its market capitalization to $3.012 trillion, narrowly exceeding Apple's market cap of $3.003 trillion, despite Apple's stock also rising by 0.8%. Microsoft retained its position as the world's most valuable company with a market cap of $3.15 trillion, following a 1.9% rise in its shares.
The firm's leadership in the AI chip market is evident, with an estimated 80% market share within data centers. Nvidia's data center division, featuring its sought-after GPU sales, has experienced remarkable expansion, with its revenue soaring to $22.6 billion in the latest quarter. Currently, this segment represents 86% of Nvidia's overall sales.
The surge in Nvidia's stock reflects a wider trend of growing investor confidence in firms benefiting from AI technology. This contrasts sharply with Apple, which is grappling with a decrease in iPhone demand and intense competition in China, the largest smartphone market globally.
In 2024, Nvidia's stock has soared by 147%, driven by the surging demand for its advanced processors. These processors are vital for tech giants such as Microsoft, Meta Platforms, and Alphabet, the parent company of Google, as they aggressively enhance their AI computing capabilities to lead in this burgeoning field.
Nvidia's ascent to a trillion-dollar valuation is characterized by a strategic shift from gaming hardware to AI chips and cloud services. In the last five years, the company's stock has surged by over 3,290%, reflecting the market's confidence in its AI prowess.
However, Nvidia's market leadership is challenged by competitors like AMD and Intel, who are also venturing into AI chip production. Additionally, Nvidia must address the concerns of significant clients such as Amazon, Google, and Microsoft, who are seeking alternatives to reduce reliance on Nvidia's chips.
