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Nvidia Surpasses Microsoft to Become the Most Valuable Publicly Traded Company

ByYasmeeta Oon

Jun 19, 2024

Nvidia Surpasses Microsoft to Become the Most Valuable Publicly Traded Company

Nvidia, a name once synonymous with high-performance graphics chips in the gaming community, has surged to become the most valuable public company globally. With a remarkable leap in its stock price, Nvidia has now eclipsed tech giants like Microsoft and Apple.

On Tuesday, Nvidia’s shares rose by 3.6%, pushing its market capitalization to an astounding $3.34 trillion. This surpasses Microsoft, now valued at $3.32 trillion. Earlier this month, Nvidia achieved a $3 trillion market cap for the first time, outpacing Apple, which currently holds a market value of $3.29 trillion after a slight decline of 1.1% in its stock.

Nvidia’s stock has seen an impressive increase of over 170% year-to-date, driven largely by its dominance in the AI chip market. Since the end of 2022, Nvidia’s stock has multiplied more than ninefold, coinciding with the explosive growth of generative artificial intelligence technologies.

  • Market Dominance in AI Chips: Nvidia holds approximately 80% of the AI chip market for data centers.
  • Revenue Surge in Data Centers: The company’s data center business saw a revenue increase of 427% year-over-year in the most recent quarter.
  • Strategic Positioning in AI: Nvidia’s technology is crucial for AI models developed by leading tech firms like OpenAI, Microsoft, and Alphabet.

Nvidia’s revenue from its data center business reached $22.6 billion in the latest quarter, up 427% from the previous year. This segment now accounts for about 86% of the company’s total sales. The burgeoning demand for AI capabilities has driven tech behemoths, including OpenAI, Microsoft, Alphabet, Amazon, and Meta, to acquire Nvidia’s processors, essential for developing AI models and managing extensive workloads.

Financial MetricQ1 2024Q1 2023YoY Change
Total Revenue$26.3 billion$8.1 billion+224%
Data Center Revenue$22.6 billion$4.3 billion+427%
Gaming Revenue$2.6 billion$3.4 billion-24%
Operating Income$14.5 billion$2.6 billion+458%
Net Income$12.3 billion$2.3 billion+435%

Founded in 1991, Nvidia initially carved out a niche in the gaming industry, providing graphics processing units (GPUs) that powered 3D gaming experiences. Over the years, the company expanded into other areas, including chips for cryptocurrency mining and cloud gaming services. However, the real turning point for Nvidia came in recent years with the advent of AI.

Nvidia’s GPUs have become the backbone of AI development, facilitating the computational power needed for training and deploying AI models. This pivotal role in AI has propelled Nvidia into the limelight, transforming it from a gaming-centric hardware provider to a leading player in the tech industry.

  • Core Strength in GPUs: Nvidia’s GPUs are critical for AI and deep learning applications, providing unmatched performance and efficiency.
  • Strategic AI Investments: The company’s investments in AI have positioned it as a leader in the tech industry’s most dynamic and lucrative segment.
  • Stock Market Growth: Nvidia’s stock has surged dramatically, reflecting investor confidence in its continued dominance in AI.
  • Broadened Market Influence: Beyond gaming, Nvidia now influences diverse sectors including data centers, automotive, and healthcare with its AI technologies.
  • Leadership and Vision: Under CEO Jensen Huang’s guidance, Nvidia has adeptly navigated its transition from gaming to AI, setting new benchmarks in innovation and market value.

Nvidia’s strategic partnerships have been instrumental in its growth. Microsoft, one of the largest buyers of Nvidia’s GPUs, has integrated Nvidia’s technology into its Azure cloud services. This integration supports AI-driven applications and services, enhancing Microsoft’s product offerings across Office and Windows through initiatives like Copilot+, its AI-powered assistant.

Moreover, Nvidia’s technology has become essential for companies across various industries that are adopting AI. From healthcare to automotive, Nvidia’s AI capabilities are reshaping traditional processes and driving advancements in sectors far beyond gaming.

In a significant move to attract a broader range of investors, Nvidia announced a 10-for-1 stock split, effective June 7. This decision comes as Nvidia’s stock price has soared, making it more accessible to smaller investors and potentially facilitating its inclusion in the Dow Jones Industrial Average. The Dow, a price-weighted index, could see Nvidia added due to this stock split, as companies with higher stock prices have a greater influence on the benchmark.

Nvidia’s rise has also catapulted its co-founder and CEO, Jensen Huang, into the ranks of the world’s wealthiest individuals. Huang’s net worth has reached approximately $117 billion, making him the 11th richest person globally, according to Forbes. His leadership and vision have been crucial in steering Nvidia’s transformation and positioning it at the forefront of the AI revolution.

While Nvidia currently leads the AI chip market, other tech giants are not far behind. Microsoft, with its significant investments in OpenAI and the integration of AI into its core products, is a major beneficiary of the AI boom. Microsoft’s shares have climbed about 20% this year, underscoring its stake in the future of AI.

Apple, despite its recent stock decline, continues to innovate and hold a substantial market position. The ongoing competition among these tech titans in the AI space highlights the dynamic and rapidly evolving nature of the industry.

Nvidia’s extraordinary ascent to become the world’s most valuable public company underscores the transformative impact of AI on the tech industry. From its roots in gaming to its current dominance in AI, Nvidia exemplifies the potential of innovation and strategic foresight. As the demand for AI technologies continues to grow, Nvidia’s role as a market leader appears set to expand, shaping the future of both technology and global business.

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Featured Image courtesy of The Boston Globe

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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