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Nvidia has officially claimed the title as the most valuable company in the world, surpassing Apple with a market capitalization of $3.53 trillion, according to LSEG data. This achievement comes on the heels of a record-breaking stock rally for Nvidia, driven by the increasing demand for its specialized artificial intelligence processors.
Apple, which briefly held the title before being overtaken by Nvidia, currently has a market value of $3.52 trillion, with its shares rising by 0.4% as Nvidia’s market value increased by 0.8% to $3.47 trillion. Both companies, along with Microsoft, have been instrumental in the technology sector’s strong performance on Wall Street this year, with their market capitalizations closely aligning.
Nvidia, a Silicon Valley chipmaker, is a key player in the AI computing industry and has emerged as a dominant force against competitors such as Microsoft, Alphabet, Meta Platforms, and others in the race to control this cutting-edge technology. Since the 1990s, Nvidia has been known for developing processors for video games, but in recent years, its focus has shifted towards AI computing, leading to its current success.
In October, Nvidia’s stock saw an 18% increase following the announcement of a $6.6 billion funding round by OpenAI, a company responsible for ChatGPT. This, coupled with an increase in demand for Nvidia’s chips and a positive quarterly profit report from data storage company Western Digital, have driven Nvidia’s stock to new heights.
Investment director Russ Mould at AJ Bell commented on the strong demand for Nvidia’s chips, stating that companies are increasingly incorporating AI into their operations, creating a favorable market for Nvidia. As long as there is no significant economic downturn, Mould believes that companies will continue to invest in AI capabilities, providing further growth opportunities for Nvidia.
Nvidia’s record-high share prices on Tuesday were bolstered by TSMC’s impressive quarterly profit, reflecting the rising demand for AI processors worldwide. Meanwhile, Apple has faced challenges in its smartphone sales, particularly in China where iPhone sales declined while Huawei experienced significant growth.
Analysts are optimistic about Nvidia’s revenue growth, with projections nearing $32.9 billion, an increase of nearly 82% year over year. In contrast, Apple’s revenue is expected to grow by 5.55% to $94.5 billion, highlighting the contrasting fortunes of the two tech giants.
The tech sector, including the broader U.S. stock market, is heavily influenced by the shares of Nvidia, Apple, and Microsoft, accounting for approximately one-fifth of the S&P 500 index’s weight. The S&P 500 hit an all-time high last week, driven by optimism around AI prospects, expectations of Federal Reserve rate cuts, and positive earnings reports.
Nvidia’s impressive gains have made its options among the most actively traded, attracting interest from option traders. The stock’s nearly 190% rise this year has been fueled by the company’s optimistic forecasts in response to the growing popularity of generative AI.
As Nvidia continues to dominate the tech industry and solidify its position as the most valuable company in the world, investors and analysts alike will be watching closely to see how the company navigates future challenges and sustains its growth in the evolving AI landscape.
