Nvidia‘s shares rallied around 6% on Tuesday to hit a record high, positioning the AI chipmaker’s stock market value just $100 billion shy of overtaking Apple in a significant reshuffle of Wall Street’s top players. The stock last traded at $1,128, lifting Nvidia’s market capitalization to $2.8 trillion, compared to Apple’s $2.9 trillion. Apple’s current standing makes it the second-most valuable company on Wall Street after Microsoft.
During the session, Nvidia’s stock surged as much as 8% to an intra-day high of $1,149.39. Conversely, Apple’s stock saw a slight decline of 0.2% in afternoon trading. Nvidia’s shares have surged nearly 13% since it projected second-quarter revenue above Wall Street’s expectations last week and announced a stock split, further exciting investors betting on the AI frontrunner.
“The market has been struggling to keep up with the company’s ever-improving growth trajectory. At a mid-thirties forward earnings multiple, this still doesn’t feel like bubble territory,” said Derren Nathan, head of equity analysis at Hargreaves Lansdown.
Nvidia recently traded at 36 times its forward profit estimates, compared to 38 for Advanced Micro Devices and 21 for Intel, according to LSEG data. The company’s shares have more than doubled so far this year after more than tripling last year. Nvidia, a major beneficiary of the AI boom, reported a five-fold increase in revenue in its data center segment last week as customers line up for its high-performance chips.
Alphabet, Microsoft, Amazon.com, and other tech giants have been vying for a limited supply of Nvidia’s advanced chips to dominate AI computing. “Business is doing incredibly well; there are so many opportunities to keep growing, and the AI theme still has legs. When the song is that catchy, investors want to keep humming it all day long,” said Dan Coatsworth, investment analyst at AJ Bell, regarding Nvidia’s stock rally.
Meanwhile, Apple has been considered a must-own stock on Wall Street but has underperformed compared to other Big Tech companies in recent months, falling around 2% this year due to weak iPhone demand and stiff competition in China. Microsoft overtook Apple as the world’s most valuable company earlier this year, advancing due to gains from early investments in artificial intelligence across its cloud services. Microsoft’s shares were down 0.4% on Tuesday, giving it a market value of $3.1 trillion. Apple has also been slower in integrating generative AI, which can produce human-like responses to written prompts, into its products compared to rivals like Microsoft and Google.
Key Figures
| Company | Market Value ($ Trillion) | Stock Price ($) | Stock Change (%) |
|---|---|---|---|
| Nvidia | 2.8 | 1,128 | +6 |
| Apple | 2.9 | N/A | -0.2 |
| Microsoft | 3.1 | N/A | -0.4 |
Highlights of Nvidia’s Market Performance:
- Nvidia’s shares rallied around 6% to hit a record high.
- Nvidia’s market capitalization reached $2.8 trillion.
- Nvidia’s stock surged as much as 8% during the session.
- Nvidia’s shares have surged nearly 13% since last week’s forecast.
- Nvidia recently traded at 36 times its forward profit estimates.
- Nvidia reported a five-fold jump in revenue at its data center segment.
- Tech giants compete for a limited supply of Nvidia’s high-end chips.
Apple’s slower adoption of generative AI technologies and weaker iPhone demand have contributed to its relative underperformance. Microsoft’s strategic investments in AI and cloud services have allowed it to surpass Apple in market value, reinforcing its position as the most valuable company globally.
As Nvidia continues to benefit from the AI boom, its position as a major player in the tech industry is increasingly solidified. With a steady stream of revenue growth and high demand for its cutting-edge chips, Nvidia’s future in AI computing looks promising. This momentum has not only driven its stock prices to new heights but also set the stage for potentially surpassing Apple’s market value, signaling a new era for Wall Street’s top companies.
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Featured Image courtesy of The Star