The pecking order of the tech world has changed once more, and once again its thr AI-driven frenzy at Nvidia, thats driving this change. The AI and graphics chip maker has now achieved the status of the world’s most valuable public company. On Tuesday, Nvidia’s shares climbed by 3.6%, elevating its market capitalization to a total of record $3.34 trillion. This rise has placed Nvidia ahead of Microsoft, which is currently valued at $3.32 trillion. Earlier this month, Nvidia crossed the $3 trillion threshold for the first time, surpassing Apple in the process. The shares of the iPhone-maker are currently priced at $214.29.
Nvidia’s stock has experienced a surge, increasing by more than 170% since the beginning of the year. This impressive performance received an additional boost following the company’s first-quarter earnings report in May, and elevating the company’s market cap from $2.2 trillion a few months ago. The stock’s value has multiplied more than ninefold since the end of 2022, a growth trajectory that has paralleled the emergence and advancement of generative AI. Currently, Nvidia’s shares are priced at $135.58.
As of now, the company is a dominant face in the AI chip industry, controlling about 80% of the market for AI chips used in data centers. This market segment has seen explosive growth as tech giants such as OpenAI, Microsoft, Alphabet, Amazon, and Meta have scrambled to acquire the processors necessary for developing and operating large-scale AI models. For the latest quarter, Nvidia reported a 427% year-over-year increase in revenue from its data center business, which reached $22.6 billion. This segment now constitutes approximately 86% of Nvidia’s total sales.
Nvidia’s story began in 1991, catering to the enthusiast PC gaming market with its graphics processing units (GPUs). Unlike traditional central processing units (CPUs), GPUs are designed for parallel processing, allowing them to handle massive datasets and perform intricate calculations simultaneously. Over the years, the company also ventured into producing chips for cryptocurrency mining and offering cloud gaming subscriptions. However, the past two years have seen Nvidia transform into a central player in the AI industry. Wall Street has increasingly recognized the company’s critical role in the AI revolution, leading to a significant rise in its stock value. This growth has also substantially increased the wealth of Nvidia’s co-founder and CEO, Jensen Huang, who is now one of the world’s richest individuals.
Nvidia is also swiftly catching up to the other titans in the AI landscape – recently, it introduced platforms like Blackwell and Rubin, specifically designed for real-time generative AI and offering significant efficiency gains compared to previous solutions. Blackwell promises to reduce cost and energy consumption by up to 25 times, while Rubin, unveiled at Computex 2024, features new GPUs and a central processor called “Vera,” aiming to further revolutionize AI computing capabilities.
While Nvidia has surged ahead, Microsoft has also benefited significantly from the AI boom. Microsoft’s shares have risen by about 20% this year. The company has invested heavily in AI, notably by taking a significant stake in OpenAI and integrating AI models into its core products, such as Office and Windows. Microsoft is a major customer of Nvidia’s GPUs, which it uses for its Azure cloud services to support AI applications. The software giant recently introduced a new generation of laptops designed to run AI models, known as Copilot+.
