Nvidia became the world’s most valuable company on Tuesday after its share price reached an all-time high. The stock closed at nearly $136, up 3.5%, surpassing Microsoft in market value. Earlier this month, Nvidia had already overtaken Apple.
The American company specializes in producing computer chips essential for artificial intelligence (AI) software, and the increasing demand for its products has significantly boosted its sales and profits over recent years.
Many investors are optimistic about Nvidia’s future earnings potential, driving the share price higher, although some have raised concerns about its lofty valuation. The latest rally places the company’s market value at $3.34 trillion (£2.63 trillion), with the stock price nearly doubling since the beginning of the year. Remarkably, eight years ago, the stock was worth less than 1% of its current value.
Nvidia benefits from intense competition among AI developers, including tech giants like Microsoft, Alphabet (Google’s parent company), Meta, and Apple, all striving to develop leading AI products. This competitive landscape favors Nvidia, which dominates the AI chip market.
As a result, investors are confident that Nvidia’s value will continue to rise. The company’s sales and profits have consistently exceeded analyst expectations in recent years. In May, following the release of Nvidia’s latest financial results, Quilter Cheviot technology analyst Ben Barringer remarked that the company had “once again cleared a very high hurdle,” adding that demand shows no signs of slowing down.
However, some analysts remain cautious. In February, Barclays credit analyst Sandeep Gupta expressed doubts about Nvidia’s ability to maintain its large market share amid growing competition and questioned how Nvidia’s customers would monetize AI software.
