According to foreign reports on June 19th, NVIDIA (NVDA) officially surpassed Microsoft (MSFT) in market value on Tuesday to become the world’s most valuable company, just two weeks after overtaking Apple (AAPL) for the second spot.
NVIDIA’s stock price rose by approximately 3.5% today, surpassing $135 per share, pushing the chip manufacturer’s market value over $3.33 trillion. Microsoft fell by 0.4% on Tuesday, with a market value close to $3.32 trillion.
Over the past 12 months, NVIDIA’s stock price has surged over 215%, and in the last five years, it has risen over 3,400%. So far this year, NVIDIA’s stock price has increased by 175%, while Microsoft’s stock price has risen nearly 19% in 2024.
On June 13, 2023, NVIDIA’s market value first exceeded $1 trillion. On March 1, 2024, the stock broke through $2 trillion, and on June 5, it quickly surpassed the $3 trillion mark.
The speed at which the company’s market value grew from $1 trillion to $3 trillion is the fastest on record. NVIDIA’s rise has made it the largest weighted stock in the S&P 500 index, playing a crucial role in the benchmark index reaching historic highs in 2024.
As of May, the S&P 500 index has been closely correlated with NVIDIA’s stock price, meaning that when NVIDIA’s stock price rises, the S&P 500 index also rises. According to data from Citigroup’s stock research team, as of Monday, NVIDIA’s stock price alone contributed one-third of the S&P 500 index’s gains so far this year.
NVIDIA completed a 10-for-1 stock split on June 10.
The company’s rise coincides with the explosive growth of generative artificial intelligence sparked by OpenAI’s ChatGPT platform launched at the end of 2022.
NVIDIA’s chips, improved graphics cards, and CUDA software platform aim to train and run artificial intelligence programs, giving it a strategic advantage. Experts suggest that competitors like AMD (AMD) and Intel (INTC) may take several years to overcome this advantage.
NVIDIA is the preferred supplier of AI chips and integrated software in the tech industry. Major tech giants like Amazon (AMZN), Google (GOOG), Meta (META), Microsoft, and Tesla (TSLA) all use NVIDIA’s hardware to support everything from cloud-based AI products for customers to their own AI models and services.
At the Taipei International Computer Show (Computex) in Taiwan on June 2, CEO Jensen Huang announced that the company would release a high-performance version of the Blackwell chip called Blackwell Ultra in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will launch an Ultra version of Rubin in 2027.
In the first quarter, NVIDIA reported an adjusted earnings per share of $6.12 and revenue of $26 billion, representing a 461% and 262% increase from the same period last year, respectively. NVIDIA’s data center revenue in the latest quarter grew 427% year-on-year to reach $22.6 billion, accounting for 86% of the company’s total revenue for the quarter. NVIDIA’s gaming division, previously its most important business, generated $2.6 billion in revenue.
However, AMD and Intel are advancing their own AI chips with the goal of surpassing NVIDIA. AMD recently announced that its MI325X and MI350 will be launched in 2024 and 2025, respectively, while stating that its next-generation MI400 AI accelerator platform will be released in 2026. Meanwhile, Intel has indicated that the prices of its Gaudi 2 and Gaudi 3 AI accelerators will be lower than competing chips. Given the billions of dollars invested by major companies in AI chips, any cost savings are sure to be welcomed.
NVIDIA also faces increasingly fierce competition from its own customers, as Amazon, Google, and Microsoft are trying to reduce their dependence on the company’s chips while saving on capital expenditures.
Founded in 1991, NVIDIA was primarily a hardware company in its first few decades, selling chips for running 3D games to gamers. The company also ventured into cryptocurrency mining chips and cloud gaming subscription services. However, in the past two years, as Wall Street has gradually recognized NVIDIA’s technology as the engine behind the explosive growth of artificial intelligence, and with no signs of this momentum slowing down, NVIDIA’s stock price has soared.
According to Forbes, this surge has increased co-founder and CEO Jensen Huang’s net worth to approximately $117 billion, making him the 11th richest person globally. Microsoft’s stock price has risen by about 20% so far this year. The software giant is also a major beneficiary of the artificial intelligence boom, holding a significant stake in OpenAI and integrating the startup’s AI models into its most important products, including Office and Windows.
Microsoft is one of the largest buyers of NVIDIA’s Graphics Processing Units (GPUs) for its Azure cloud services. The company has just released a new generation of laptops called Copilot+ designed to run its AI models.
NVIDIA’s rapid rise has yet to be included in the Dow Jones Industrial Average, a stock benchmark of the 30 most valuable companies in the U.S. Over the past few years, Apple and Microsoft have been competing for this title.
NVIDIA’s swift ascent has led the company to announce a 10-for-1 stock split plan last month, which took effect on June 7. The split gives NVIDIA a better chance of being included in the Dow index, a price-weighted index where companies with higher stock prices (rather than higher market values) have a greater impact on the benchmark index.
