Nvidia, the computer chipmaker at the center of the artificial intelligence boom, continued its spectacular stock market rise Tuesday, eclipsing Microsoft and Apple to become the world’s most valuable public company. Nvidia’s shares rosemore than 3 percent Tuesday, giving the company an overall market valuation of $3.34 trillion. Apple and Microsoft, which for years have swapped positions as the world’s most valuable company, were worth slightly less, around $3.29 trillion and $3.31 trillion respectively at the end of trading. Nvidia’s computer chips and software are crucial to training the AI algorithms behind image-generators and chatbots like OpenAI’s ChatGPT. As the tech and business worlds throw themselves into the AI boom, demand for the chips has skyrocketed, pushing Nvidia’s revenue up to $26 billion in the first quarter of this year, up from just $7.2 billion a year ago. Nvidia’s rise to become the world’s most valuable company underlines how strongly investors believe Big Tech executives’ claims that AI will overhaul whole swaths of modern life. AI demands more processing power from computers than other kinds of software, and business leaders are busy building new data centers and filling them with chips from Nvidia and other companies to handle new AI tasks.
Quick Read
- Nvidia’s Market Surge: Nvidia, the chipmaker at the heart of the AI boom, surpassed Microsoft and Apple to become the world’s most valuable public company on Tuesday.
- Stock Performance: Nvidia’s shares rose more than 3% on Tuesday, bringing its market valuation to $3.34 trillion. Apple and Microsoft were valued at around $3.29 trillion and $3.31 trillion respectively.
- AI Boom: Nvidia’s computer chips and software are essential for training AI algorithms used in applications like OpenAI’s ChatGPT, driving massive demand.
- Revenue Growth: Nvidia’s revenue skyrocketed to $26 billion in the first quarter of this year, up from $7.2 billion a year ago, reflecting the increased demand for AI-related technologies.
- Investor Confidence: Nvidia’s rise to the top highlights investors’ strong belief in the transformative potential of AI, as Big Tech executives predict it will revolutionize many aspects of modern life.
- Infrastructure Expansion: The AI surge requires significant processing power, leading businesses to build new data centers filled with Nvidia’s chips and other technologies to support new AI tasks.
- Investment Surge: Both professional investment funds and individual retail investors have heavily invested in Nvidia’s shares, driving the stock price up even faster than the company’s revenue growth. Since OpenAI launched ChatGPT in November 2022, Nvidia’s stock price has surged about 700%.
- Market Dominance: Nvidia controls approximately 70% of the market for AI chips, positioning the company as a critical player in the industry. This dominance has attracted regulatory scrutiny, though Nvidia declined to comment on Tuesday.
- Gaming Roots to AI Leader: Initially known for making chips for video game consoles and computers, Nvidia’s graphics processing units (GPUs) proved ideal for the large-scale calculations needed to train AI algorithms.
- Strategic Shift: In the mid-2010s, Nvidia began optimizing its software to better support AI applications. By the time the AI boom occurred, the industry was already familiar with Nvidia’s chips and software, giving the company a significant advantage.
- Competitive Edge: While competitors like AMD and Intel are working to catch up, industry analysts and AI researchers believe Nvidia will continue to benefit from its head start in the AI chip market for years to come.
- Milestone Achievement: Nvidia’s stock market value has soared to $3.334 trillion, making it the most valuable company in the S&P 500, surpassing Microsoft ($3.317 trillion) and Apple ($3.286 trillion).
- Market Surge: On Tuesday alone, Nvidia’s market value increased by $113 billion.
- Stock Price: Nvidia’s stock closed at $135.58 on Tuesday. This follows a 10-for-1 stock split after trading closed on June 7, which lowered the price per share from over $1,200 and provided nine additional shares for each existing share.
- Revenue Growth: Analysts predict Nvidia’s revenue for the fiscal year ending in January 2025 will reach $119.9 billion, doubling from fiscal 2024 and quadrupling from the previous year.
- Profitability: Nvidia’s estimated net margin stands at 53.4%, meaning over half of its revenue turns into profit. This compares favorably to Apple’s 26.3% and Microsoft’s 36.4%.
- S&P 500 Impact: Nvidia contributed to 32% of the S&P 500’s gain for the year through May.
- Historical Context: Nvidia is the 12th company to hold the title of most valuable in the S&P 500 since 1926, joining the ranks of AT&T, IBM, and Walmart.
The Associated Press has the story:
Nvidia pushes out Apple, Microsoft to become world’s most valuable company
Newslooks- NEW YORK- (AP)
Nvidia’s startling ascent in the stock market reached another milestone Tuesday as the chipmaker rose to become the most valuable company in the S&P 500. Investors now say the company is worth over $3.3 trillion. Nvidia has seen soaring demand for its semiconductors, which are used to power artificial intelligence applications. Revenue more than tripled in the latest quarter from the same period a year earlier.
Professional investment funds and individual retail investors alike have thrown their money into Nvidia’s shares, pushing up the price even faster than the company’s revenue has grown. Since OpenAI kicked off the wave of interest in AI with the launch of ChatGPT at the end of November 2022, Nvidia’s stock price has grown about 700 percent.
Nvidia controls about 70 percent of the market for AI chips, making the company a kingmaker in the industry. That has brought new scrutiny from regulators. Nvidia declined to comment Tuesday. Before the AI boom, Nvidia was best known for making computer chips used in video game consoles and computers. But the special characteristics of these “graphics processing units” that made them useful for gaming also made them well-suited to crunching the giant calculations needed to train AI algorithms.
In the mid 2010s, researchers at AI labs began using Nvidia GPUs as they tinkered with evermore capable AI. The company took notice, and began improving the software used to program its chips to make it more suited to AI work. By the time the AI boom happened, most of the industry was accustomed to using Nvidia’s chips and software. Other chip companies, like AMD and Intel, have scrambled to catch up, but industry analysts and AI researchers say that Nvidia will continue to benefit from its head start for years.
The company’s journey to be one of the most prominent players in AI has produced some eye-popping numbers.
Here’s a look:
assed $3 trillion in market value.
$3.334 Trillion
Nvidia’s total market value as of the close Tuesday. It edged past Microsoft ($3.317 trillion). Apple is the third most-valuable company ($3.286 trillion). One year ago, the company had just crossed the $1 trillion threshold.
$113 billion
The one-day increase in Nvidia’s market value on Tuesday.
$135.58
Nvidia’s closing stock price Tuesday. Two weeks ago the stock traded at more than $1,200, but the company completed a 10-for-1 stock split after trading closed on June 7. That gave each investor nine additional shares for every share they already owned. Companies with a high stock price often conduct stock splits to make the stock more affordable for investors.
$119.9 billion
Analysts’ estimate for Nvidia’s revenue for the fiscal year that ends in January 2025. That would be about double its revenue for fiscal 2024 and more than four times its receipts the year before that.
53.4%
Nvidia’s estimated net margin, or the percentage of revenue that gets turned into profit. Looked at another way, about 53 cents of every $1 in revenue Nvidia took in last year went to its bottom line. By comparison, Apple’s net margin was 26.3% in its most recent quarter and Microsoft’s was 36.4%. Both those companies have significantly higher revenue than Nvidia, however.
32%
How much of the S&P 500’s gain for the year through May came only from Nvidia.
11
The number of companies other than Nvidia that were once the most valuable in the S&P 500, going back to 1926, according to S&P Dow Jones Indices. Among them: AT&T, IBM and Walmart.
