In a significant market shift, Nvidia overtook Apple in market capitalization on Wednesday, reflecting investor confidence in the chipmaker’s pivotal role in the burgeoning artificial intelligence (AI) sector. Nvidia now holds the position of the second-most valuable public company, trailing only Microsoft.
Nvidia’s market cap soared to an impressive $3.019 trillion following a 5% rise in its stock price, edging past Apple’s $2.99 trillion market value. Microsoft remains the market leader with a capitalization of $3.15 trillion as of Wednesday.
The meteoric rise of Nvidia shares, which have climbed over 24% since the announcement of its first-quarter earnings in May, underscores the company’s dominance in the AI chip market. Nvidia commands an estimated 80% market share for AI chips used in data centres, a sector attracting substantial investment from major cloud service providers.
Investor confidence is bolstered by Nvidia’s robust sales growth to key cloud clients, which appears sustainable. In the most recent quarter, Nvidia’s data centre revenue, primarily from GPU sales, surged 427% year-over-year to $22.6 billion, comprising approximately 86% of the company’s total sales.
Conversely, Apple’s stock has seen a modest 5% increase this year, hindered by stagnant sales growth. Apple’s latest quarterly earnings report revealed a 4% decline in overall sales and a 10% drop in iPhone sales compared to the previous year. The company is grappling with strategic challenges, including fluctuating demand in China, manufacturing issues, and mixed responses to its new Vision Pro virtual reality headset.
Apple, the first company to achieve $1 trillion and $2 trillion market caps, had maintained its status as the most valuable U.S. company until Microsoft surpassed it earlier this year. Microsoft’s growth has also been fuelled by investor interest in AI infrastructure.
Nvidia, established in 1991, initially focused on gaming hardware before expanding into cryptocurrency mining chips and cloud services. The company’s stock has experienced significant volatility but has seen extraordinary growth, skyrocketing over 3,290% in the past five years. In May, Nvidia announced a 10-for-1 stock split, further reflecting its strong market performance.
Nvidia’s ascent highlights the shifting dynamics of the tech industry, driven by the increasing importance of AI technology and infrastructure.
Picture Cred: Bloomberg
