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Nvidia Surpasses Microsoft as Most Valuable Public Company

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Nvidia Surpasses Microsoft as Most Valuable Public Company

Nvidia, once primarily recognized in the niche gaming community for its graphics chips, has now become the most valuable public company in the world.

Nvidia's (NVDA) market capitalization surpassed Microsoft's during a tech rally driven by advanced semiconductor manufacturers and other AI infrastructure providers, such as Super Micro Computer (SMCI) and Qualcomm (QCOM).

On June 18th, Shares of the chipmaker surged 3.6%, elevating its market cap to $3.34 trillion and surpassing Microsoft, now valued at $3.32 trillion. Earlier this month, Nvidia reached $3 trillion for the first time and also surpassed Apple.

The rise in Nvidia's market value has been fueled by the increasing demand for its chips, which are considered the leading choice in the AI sector. The company's shares have surged over 170% this year and have soared approximately 1,100% since hitting a low point in October 2022.

Nvidia's blockbuster earnings and growing investor enthusiasm for AI are turbocharging its rally. This fervor is clearly seen in Nvidia's market value, which soared from $2 trillion to $3 trillion in just 96 days. Whereas, Microsoft, one of the two other companies to achieve such high market valuations, took 945 days to increase from $2 trillion to $3 trillion, whereas Apple took 1,044 days to reach the same milestone.

On the contrary, Apple's shares declined by 1.1% on 18th June, resulting in the iPhone maker holding a market value of $3.29 trillion.

Nvidia currently dominates approximately 80% of the market for AI chips used in data centers, a sector that has expanded significantly as companies like OpenAI, Microsoft, Alphabet (Google), Amazon, Meta (Facebook), and others rush to acquire processors necessary for building AI models and handling increasingly large workloads.

In its latest quarter, Nvidia's revenue from the data center business surged 427% year-over-year to $22.6 billion, representing approximately 86% of the company's total sales.

Founded in 1991, Nvidia initially focused on selling chips for gamers to enhance 3D gaming experiences. The company has also ventured into cryptocurrency mining chips and cloud gaming subscriptions over the years.

However, in the past two years, Nvidia's stock has soared as the market recognized its technology as pivotal in driving the AI boom, which continues unabated. This surge in valuation has propelled co-founder and CEO Jensen Huang's net worth to around $117 billion, ranking him as the 11th wealthiest person globally according to Forbes.

Microsoft shares have risen approximately 20% this year, benefiting significantly from the AI boom. The company made a substantial investment in OpenAI and integrated its AI models into key products like Office and Windows. Microsoft is also a major purchaser of Nvidia's GPUs for its Azure cloud service and recently introduced a new line of laptops optimized to run its AI models, branded as Copilot+.

Nvidia, a relative newcomer to the position of the most valuable U.S. company, has rapidly ascended in value. For several years, Apple and Microsoft have alternated in holding this title.

Despite its rapid growth, Nvidia has yet to be included in the Dow Jones Industrial Average, a stock index comprising 30 of the largest U.S. companies.

To potentially facilitate its inclusion, Nvidia announced a 10-for-1 stock split alongside its recent earnings release, effective June 7. This split is aimed at adjusting Nvidia's stock price, as the Dow is a price-weighted index where higher stock prices exert more influence on the benchmark, rather than market capitalization alone.

Sources:

  1. Financial Express
  2. CNBC

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