Nvidia surpassed the $3 trillion market cap milestone, overtook Apple in market cap and became the second most valuable public U.S. company on Wednesday (June 5).
After a 5% rise in shares, Nvidia had a market value of $3.019 trillion at market close, while Apple’s was $2.99 trillion, CNBC reported Wednesday.
Nvidia is now second only to Microsoft, which had a market value of $3.15 trillion at market close, according to the report.
Microsoft passed Apple earlier this year to gain the title of most valuable U.S. company, the report said.
Apple had long held that title and was the first company to reach a market cap of $1 trillion and then $2 trillion, but its growth has stalled this year amid issues like demand in China, manufacturing and the reception of its mixed-reality headset, Vision Pro, per the report.
Both Microsoft and Nvidia have benefited from investor interest in artificial intelligence (AI) infrastructure, according to the report. Nvidia makes AI chips and holds about an 80% share of the market for chips for data centers.
Driven by the AI boom, Nvidia’s shares have risen 24% since it reported first-quarter earnings in May and 3,290% over the past five years, per the report.
Nvidia’s May 22 earnings report beat Wall Street expectations and reassured investors and analysts who had been watching for the earnings call as a bellwether for the entire AI industry.
The chipmaker reported that its revenue for the quarter ended April 28 was up 18% compared to the previous quarter and up 262% from the same period a year earlier.
Nvidia founder and CEO Jensen Huang attributed the company’s revenue growth to companies and countries that are partnering with Nvidia to transition from their traditional data centers to “AI factories” that will deliver productivity gains in most industries.
On Sunday (June 2), Huang said Nvidia aims to update its AI accelerators each year, with the Blackwell Ultra chip due in 2025, and will debut a next-generation AI platform in 2026.
With this expansion, Huang also expects more and more companies and government agencies to embrace generative AI.
Shares of Nvidia, Apple and Microsoft were all slightly lower in early trading on Thursday. Investors have flocked to Nvidia’s stock as tech groups such as Google, Microsoft and Meta spend billions of dollars on its chips, with no indication that their spending spree will slow in the near future. Nvidia’s data centre chips power the AI models that chief executive Jensen Huang has claimed will spur a new “industrial revolution”, transforming global business with productivity-enhancing features.
The company delivered another blockbuster earnings report in May, with revenues up 262 per cent year on year, thanks largely to sales of its current generation “Hopper” chips. It also announced a 10-for-one stock split, which goes into effect on June 7. Nvidia has single-handedly driven more than a third of the gains on Wall Street’s benchmark S&P 500 index this year, according to Bloomberg data, raising fears in some quarters of an unsustainable bubble. The S&P 500 rose 1.2 per cent on Wednesday and is up 12.3 per cent year to date.
Still, Nvidia’s bumper earnings and repeated upgrades to forecasts mean the company’s valuation is not at an all-time high when measured as a ratio of either its historic or expected profits.
On Wednesday it was valued at 42 times its expected earnings over the next 12 months. That is up from 23 times forward earnings at the start of the year and well above Apple’s 29 times — although that is below the peak it hit during the height of the first wave of AI euphoria last year.
“The benefit they have is they’re one of very few companies that can actually prove AI revenues,” said Stuart Kaiser, head of US equity trading strategy at Citigroup. “The higher [the stock] gets and the further you get into this revenue cycle the more the risks increase, but so far it looks pretty clean.” Despite moves by rivals such as AMD and Intel to capture some of Nvidia’s market share, it remains the undisputed leader in the global technology race to offer the most advanced hardware for increasingly demanding AI workloads, as well as the software tools to build AI applications. Huang has promised a “one-year rhythm” of new chips and unveiled Nvidia’s “Blackwell” products in March. Huang has said they would generate “a lot” of revenue this year, sooner than many analysts had forecast.
Nvidia also announced that its stock would undergo a 10-for-1 split on June 7 and the company will raise its dividend from $0.04 per share to $0.10 per share.
But Nvidia isn’t the only game in town.
AMD (AMD) and Intel (INTC) are pushing forward with their own AI chips with the goal of outmaneuvering Nvidia. AMD recently announced its MI325X and MI350 will hit the market in 2024 and 2025, respectively, and said its next-generation MI400 AI accelerator platform will land in 2026.
By Agencies
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