Nvidia has surpassed tech giants Apple and Microsoft to become the world’s most valuable company, a milestone driven by an unprecedented surge in its shares.
Shares of Nvidia climbed around 3.5% on Tuesday, pushing its market value to about $3.34 trillion. With this leap, Nvidia has dethroned Microsoft and Apple, which had been vying for the top position in recent days.
The unprecedented rise in Nvidia’s market value is primarily fuelled by the soaring demand for its AI-optimized chips.
The company’s shares have surged over 170% this year alone, skyrocketing by around 1,100% since their low in October 2022.
Exceptional earnings and growing investor enthusiasm for AI have supported the company's meteoric rise. Nvidia's market value surged from $2 trillion to $3 trillion in just 96 days.
For comparison, Microsoft took 945 days and Apple 1,044 days to make the same leap, according to Bespoke Investment Group.
Historically, only 11 US companies since 1925 have held the top spot in market value on a closing basis, Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, told news agency Reuters.
The fortunes of these companies have varied widely. Microsoft, for example, hit the number one spot in the late 1990s but struggled post-dotcom bubble before rebounding strongly in the past decade.
On the other hand, Exxon Mobil, once the world’s most valuable company, saw its shares decline due to falling oil prices. Cisco, another former leader, serves as a cautionary tale, peaking during the dotcom boom only to see its shares plummet afterward.
Nvidia's exceptional performance is highlighted by its recent quarterly results, where revenue more than tripled to $26 billion and net income surged seven-fold to $14.9 billion.
The company’s revenue for the current fiscal year is projected to double to $120 billion, with an additional 33% growth expected in fiscal 2026, reaching $160 billion, according to LSEG data quoted by Reuters.
Despite the rapid increase in its share price, Nvidia's forward price-to-earnings ratio is at 43, which is elevated compared to the S&P 500’s 21 times earnings but has moderated from last year’s levels.
While Nvidia stands out, other technology companies like Super Micro Computer and Arm Holdings have also seen significant gains, driven by the burgeoning AI market.
Nvidia’s continued success hinges on its ability to sustain growth and fend off competition, noted Bespoke analysts. For now, its robust earnings and optimistic forecasts keep it ahead of the pack, securing its position as the world’s most valuable company.
