Nvidia Soars to New Heights, Becoming World’s Second Most Valuable Company

News Asia 360
ByNews Asia 360

Key Takeaways:

  • Nvidia’s stock price skyrocketed, reaching a record high and pushing its valuation over US$3 trillion.
  • This surge made Nvidia the world’s second most valuable company, surpassing Apple.
  • The surge is driven by Nvidia’s dominance in the AI chip market, where demand for its processors is booming.
  • Apple, on the other hand, is facing challenges with iPhone sales and competition, and some see them falling behind in AI development.
  • Despite its high valuation, analysts remain optimistic about Nvidia’s future earnings potential.

Chipmaker Nvidia achieved a historic milestone on Wednesday, reaching a valuation of over US$3 trillion and surpassing Apple to become the world’s second most valuable company. This significant shift in Silicon Valley dominance comes as Nvidia prepares for a stock split aimed to attract more individual investors.

Nvidia’s stock price surged 5.2% to US$1,224.40, pushing its market capitalization past the US$3 trillion mark. This dethroned Apple, currently valued at US$3.003 trillion, from its long-held position as the number two company.

Microsoft remains the world leader with a market cap of US$3.15 trillion.

Analysts attribute Nvidia’s surge to its dominant position in the artificial intelligence (AI) chip market.

With AI technology experiencing explosive growth, companies like Apple and Meta are heavily investing in AI development, creating a surge in demand for Nvidia’s powerful processors. This demand, coupled with limited supply, has fueled a 147% increase in Nvidia’s stock price so far in 2024.

The recent surge follows Nvidia’s impressive financial forecast released in late May, which propelled the stock price by nearly 30%.

The company’s growth is further emphasized by the fact that its daily market capitalization gain on Wednesday surpassed the entire value of AT&T.

Nvidia’s success is fueled not just by financials but also by industry recognition. CEO Jensen Huang received extensive media coverage in Taiwan, his birthplace, and was mobbed by enthusiastic attendees at a tech trade fair.

This excitement surrounding AI technology is also reflected in the broader chip market, with the PHLX chip index surging 4.5% on Wednesday.

In contrast to Nvidia’s AI-driven success, Apple is facing challenges.

The iPhone giant is struggling with weak iPhone demand and fierce competition in China. Additionally, some investors perceive Apple as lagging behind other tech giants in integrating AI features into its products.

Despite its current high valuation, Nvidia’s future earnings projections remain optimistic.

Analysts believe the company is actually less expensive than a year ago when compared to its expected earnings. This suggests that Nvidia’s growth potential is still significant.

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