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Nvidia surpasses Apple and Microsoft to become the most valuable company in the world
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Nvidia overtook Microsoft and Apple to become the world’s most valuable publicly traded company after months of explosive share price growth driven by demand for its chips and investor frenzy over artificial intelligence.
The company’s shares rose 3.5% to $135.58 on Tuesday, taking its market capitalization to $3.335 trillion and surpassing the two technology giants that have long battled for pole position in the stock markets. from the USA.
Nvidia has been the main beneficiary of a boom in demand for chips that can train and run powerful generative AI models, like OpenAI’s ChatGPT. In less than two years, it has transformed itself from a $300 billion company facing a glut of chips exacerbated by a cryptocurrency crash into one of the most powerful technology companies in the world, with other Silicon Valley giants lining up to ensure its latest products.
Its huge share price gains alone have driven about a third of the 14% year-to-date rise in the benchmark S&P 500 index, in a rally that has shocked even optimistic observers.
“Now it’s animal spirits, it’s human emotions taking over,” said Ted Mortonson, technology strategist at Baird. “Nvidia is a fantastic company, don’t get me wrong. There are many drivers[for the stock]. . . but 40% in a month, that’s not normal.”
Founded 31 years ago to build graphics cards for video gamers, the Silicon Valley-based company last year saw successive quarters of huge revenue growth, announcing a 265% annual increase in February and 262% in May. Its shares have risen about 170% since the beginning of the year.
Nvidia Chief Executive Jensen Huang declared that the company is at the center of a new “industrial revolution”, unleashing the power of generation AI transform every sector of the global economy with smart computing.
Google, Microsoft and Amazon have acquired their Hopper series of graphics processing units for their cloud services. from Nvidia software ecosystemCuda, which offers tools for developers using its chips, consolidates its dominance.
Meanwhile, it is rolling out its new generation of more powerful Blackwell chips, with Huang promising a “one-year cadence” of new releases. Competitors like AMD and Intel have released competing AI chips, but they have yet to significantly take over Nvidia’s market share.
“Someone has to be number one, and it’s not like Nvidia shares have gone up on their own – the financials have gone up even more,” said Stacy Rasgon, a chip analyst at Bernstein. “I’ve never seen anything like this in terms of the real economy that’s driving it. It’s incredible.”
The race to capitalize on the generative AI opportunity has swept the tech sector. At its annual developer conference last week, Apple attended, announcing its own set of generative models to be incorporated into its new operating systems and sign an important partnership agreement with OpenAI.
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Nvidia’s growing influence over broader stock indexes has raised concerns about the long-term sustainability of the market rally, but few analysts or investors predict a near-term reversal.
Of the 72 Nvidia analysts tracked by Bloomberg, only one rated the stock a “sell.”
“This market weight is really worrying. . . we are at levels of concentration that we haven’t had since 1999 – that’s problematic,” said Hans Olsen, chief investment officer at Fiduciary Trust, a wealth manager valued at US$23 billion. “But if you think about the technology bubble that lasted from 1997 until March 2000, it had a long period. This one still has a track too.
Nvidia is only the 12th company to lead the S&P 500 since its creation in 1926. Apple and Microsoft have been competing for the position of the most valuable company in the US – and often the world – for more than a decade.
The last time a North American company was worth more than both was in 2011, when ExxonMobil was the most valuable company in the country.