Nvidia became the world’s most valuable company on Tuesday, surpassing tech heavyweight Microsoft, as its chips continue to play a central role in the race to dominate the artificial intelligence market.
The chipmaker’s shares rose 3.5% to $135.58, raising its market capitalization to $3.34 trillion, just days after overtaking iPhone maker Apple to become the second most valuable company.
Nvidia’s rise has taken it from a company best known for producing video game chips to a global power. Its profits have surged amid the tech industry’s immense shift toward artificial intelligence, which has forced major companies to look to Nvidia products to serve as the backbone of the technology.
The company’s growth has outpaced other well-known names in the tech industry, including Google and Apple, and fueled a wave of investment and speculation in the market.
Nvidia’s latest rally propelled Wall Street to a new record. The S&P 500 rose 0.3% to close Tuesday at 5,487.03.
Shares are up about 180% so far this year, compared with a rise of about 19% in Microsoft shares, and demand for its top-of-the-line processors outstrips supply. Tech giants Microsoft, Meta Platforms and Alphabet, which owns Google, are racing to develop their AI computing capabilities and dominate the emerging technology.
The surge sent shares to a record high, adding more than $103 billion to Nvidia’s market capitalization on Tuesday.
To increase the appeal of its highly valued stock among individual investors, Nvidia recently split its shares 10 for one, effective June 7.
“A stock split can reduce the price per share, making it more affordable for individual investors to purchase. With Nvidia doing a 10-to-one stock split, retail investors are the real winners here,” said Sam North, market analyst at investment platform eToro.
Nvidia chips power many of the AI industry’s most important tools, including OpenAI’s ChatGPT chatbot. The company’s rising stock price and increased prominence within the industry have made its earnings reports and announcements destination events for Silicon Valley investors. Increased demand for its chips has also caused the price per unit to rise to around $30,000 and has seen the company’s revenue rise.
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As Nvidia’s power within technology has grown, it has also elevated 61-year-old CEO Jensen Huang to the same rarefied position as other industry titans and made him one of the richest men in the world. . Over the past year and a half, his net worth has increased by a staggering $93 billion, making him worth over $100 billion in total.
The company’s market value expanded from $1 trillion to $2 trillion in just nine months in February, while it took just over three months to reach $3 trillion in June.
Reuters contributed reporting