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Nvidia has leapfrogged Microsoft and Apple to become the most valuable publicly listed company in the world, following months of explosive share price growth driven by demand for its chips and an investor frenzy over artificial intelligence.
The company’s shares climbed 3.5 per cent to $135.58 on Tuesday, bringing its market capitalisation to $3.335tn and surpassing the two tech giants that have long jostled for pole position on US stock markets.
Nvidia has been the chief beneficiary of a boom in demand for chips that can train and run powerful generative AI models such as OpenAI’s ChatGPT. In less than two years, it has been transformed from a $300bn company, grappling with a chip glut exacerbated by a cryptocurrency bust, into one of the most powerful tech companies in the world, with other Silicon Valley giants lining up to secure its latest products.
Its huge share price gains have single-handedly driven about a third of the 14 per cent year-to-date increase in the benchmark S&P 500 index, in a rally that has shocked even bullish observers.
“This is animal spirits now, it’s human emotion taking over,” said Ted Mortonson, a tech strategist at Baird. “Nvidia is a fantastic company, don’t get me wrong. There are lots of drivers [for the stock] . . . but 40 per cent in a month, that’s not normal.”
Founded 31 years ago to build PC graphics cards for video gamers, the Silicon Valley-based company has in the past year seen successive quarters of huge revenue growth, announcing a 265 per cent year-on-year increase in February and 262 per cent in May. Its shares are up roughly 170 per cent since the start of the year.
Nvidia chief executive Jensen Huang has declared that the company is at the centre of a new “industrial revolution”, unleashing the power of generative AI to transform all sectors of the global economy with intelligent computing.
Google, Microsoft and Amazon have all purchased its “Hopper” series of graphic processing units for their cloud services. Nvidia’s software ecosystem, Cuda, which offers tools for developers using its chips, cements its dominance.
It is meanwhile rolling out its new generation of more powerful “Blackwell” chips, with Huang promising a “one-year rhythm” of new releases. Competitors such as AMD and Intel have launched their own competing AI chips but have yet to meaningfully eat into Nvidia’s commanding market share.
“Somebody’s got to be number one, and it’s not like the stock for Nvidia has run up all by itself — the financials have run up even more,” said Stacy Rasgon, a chip analyst at Bernstein. “I’ve never seen anything quite like this in terms of the actual economics that are driving it. It’s pretty amazing.”
The race to capitalise on the opportunity from generative AI has swept across the tech sector. At its annual developers conference last week, Apple joined in, announcing that its own suite of generative models would be embedded in its new operating systems, and signing a major partnership deal with OpenAI.
Nvidia’s growing sway over broader stock indices has stoked concerns about the long-term sustainability of the market rally, but few analysts or investors are predicting a reversal in the short term.
Of the 72 Nvidia analysts tracked by Bloomberg, just one rated the stock as a “sell”.
“This top-heaviness of the market is really concerning . . . we’re at levels of concentration that we haven’t had since 1999 — that’s problematic,” said Hans Olsen, chief investment officer at Fiduciary Trust, the $23bn wealth manager.
“But if you think back to the tech bubble, that went from 1997 until March 2000, it had a long runway. This one still has runway too,” he added.
Nvidia is just the 12th company ever to lead the S&P 500 since its inception in 1926. Apple and Microsoft have been vying for the position of the most valuable company in the US — and often the world — for more than a decade. The last time a US company was worth more than both of them was in 2011 when ExxonMobil was the most valuable company in the country.
