Nvidia beats Microsoft to become world’s most valuable company

on Jun 19, 2024
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  • The stock rose 3.5% to $135.58, lifting its market capitalization by over $110 billion to $3.335 trillion.
  • Nvidia has consistently exceeded analysts' expectations in terms of sales and profits in recent years.
  • The rally in Nvidia's stock price propelled both the S&P 500 and Nasdaq to new record highs.

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Nvidia emerged as the world’s most valuable company as its share price reached a record high on Tuesday.

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Nvidia share price trailed high over 3% on Tuesday making the chip maker the world’s most valuable company, dethroning tech giant Microsoft.

The stock rose 3.5% to $135.58, lifting its market capitalization by over $110 billion to $3.335 trillion, just days after overtaking iPhone maker Apple to become the second most valuable company.

The company makes computer chips needed for Artificial Intelligence (AI) software, and demand for its products has boosted its sales and profits over the last few years.

If investors have to be believed, its earning can grow even more, which has caused its share price to soar, though some have questioned its sky-high valuation.

Nvidia has consistently exceeded analysts’ expectations in terms of sales and profits in recent years.

With Tuesday’s surge in share price, the company’s market value now stands at $3.34 trillion, nearly doubling since the beginning of the year.

Comparison with Tech giants

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In comparison, Microsoft’s share price experienced a 0.45% drop, resulting in a stock market value of $3.317 trillion, while Apple saw a decline of over 1%, bringing its value to $3.286 trillion.

Nvidia’s share price has almost tripled year-to-date, in stark contrast to Microsoft’s approximately 19% increase. This highlights the intense competition among AI developers.

Heavyweights such as Microsoft, Google-owner Alphabet, Meta, and Apple are all engaged in a battle to create a world-leading product.

This competition is working in the favour of Nvidia, which dominates the vast majority of the AI chip market.

The rally in Nvidia’s stock price propelled both the S&P 500 and Nasdaq to new record highs.

Additionally, it has emerged as the most actively traded company on Wall Street, with a daily turnover averaging $50 billion recently. In comparison, Apple, Microsoft, and Tesla each average around $10 billion in daily turnover, as per LSEG data.

As a result, Nvidia now represents approximately 16% of the total trading volume in S&P 500 companies.

The demand for Nvidia’s AI processors, ranking higher than the competitors’ offerings, has left them in tight supply, and many investors view Nvidia as the winner to date from surging AI development, Reuters reported.

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