Nvidia Overtakes Microsoft to Become World’s Most Valuable Company

On Tuesday, Nvidia surpassed Microsoft to become the world’s most valuable public company, boasting a market cap of $3.34 trillion. This achievement follows a remarkable 170% surge in its share price this year and a more than nine-fold increase since the end of 2022, driven by the rise of generative artificial intelligence.

Nvidia, the chip-making giant, had a rocky start. In its early days, it partnered with Sega to provide 3D chips for a new gaming console but failed to deliver. To recover, Nvidia spent six months developing the RIVA 128, the first consumer GPU to integrate 3D acceleration along with 2D and video acceleration. This innovation shocked the 3D market and saved the company, putting Nvidia on the map. By confronting its mistake and seeking help, Nvidia ensured its survival and future success.

Recently, Nvidia has benefited greatly from the increasing demand for training chips that power generative AI models, like OpenAI’s ChatGPT. These high-end processors are crucial in the race to dominate AI technology.

Nvidia’s incredible market value surge over the past year highlights Wall Street’s excitement about emerging AI technology. Nvidia has become one of the most traded companies on Wall Street, with daily trading averaging $50 billion, compared to around $10 billion each for Apple, Microsoft, and Tesla, according to LSEG data. The company now accounts for about 16% of all trading in S&P 500 companies.

The insatiable demand for Nvidia’s processors has led to a tight supply, as their AI chips are considered far superior to those of their competitors. Nvidia recently traded at 44 times the expected earnings, making its stock highly attractive to investors. Last week, the company split its stock 10 for one.

Since a blowout forecast about a year ago, Nvidia has consistently exceeded Wall Street’s high expectations for revenue and profit, with the demand for its graphics processors outstripping supply. Nvidia executives said in May that demand for its Blackwell AI chips could exceed supply well into next year.