Nvidia has surpassed Microsoft in market capitalization to become the most valuable publicly traded company in the world. Nvidia shares jumped 3.5% to $135.58 per share, raising the company’s value to a record $3.335 trillion, surpassing tech giants Microsoft ($3.317 trillion) and Apple ($3.286 trillion), Reuters reported. Nvidia’s rapid rise in value over the past year has been linked to investor optimism about the prospects for AI development. Nvidia processors are considered the best on the market for AI tasks, and demand for them far exceeds supply. Thus, major technology companies such as Microsoft, Meta Platforms, and Google are actively investing in expanding their computing power for AI and introducing this technology into their products and services by purchasing Nvidia chips.
Investor Optimism and Market Dynamics
Since forecasting strong growth about a year ago, Nvidia has consistently beaten Wall Street’s revenue and profit expectations. The company’s executives said demand for its Blackwell AI chips could outstrip supply as early as next year. Nvidia has also become the most traded company on Wall Street, averaging $50 billion in daily sales, accounting for about 16% of all S&P 500 companies. Market capitalization also grew at a record pace, climbing from $1 trillion to $2 trillion in just 9 months, then to $3 trillion in 3 months. However, some experts warn of the risks of a stock correction if AI investment slows, notes NIX Solutions. Oliver Pursche of Wealthspire Advisors said, “Nvidia is getting a lot of positive attention and doing a lot of things right, but a small mistake could cause a big correction in the stock, so investors should be cautious.”
Future Prospects and Cautionary Notes
Nvidia shares recently traded at a multiple of 44 to expected specific earnings, according to LSEG data. Boosting its appeal among retail investors, Nvidia last week split its shares by a ratio of 10 to 1, increasing the number of shares while reducing their par value. We’ll keep you updated as Nvidia’s journey in the stock market continues, balancing its rapid growth with the potential risks highlighted by market analysts.