Nvidia overtakes Apple to become the world’s most valuable company

Nvidia surpassed Apple on Friday to claim the top spot as the world’s most valuable company, riding high on soaring demand for its AI-focused chips.

This news comes only four months after Nvidia briefly overtook Microsoft and Apple before Apple reclaimed the title. The market values of these tech leaders have remained close, often within a narrow range.

LSEG reported that Nvidia’s valuation reached $3.53 trillion during trading on Friday, just edging out Apple’s $3.52 trillion. Nvidia closed the day with a 0.8% gain, bringing its value to $3.47 trillion, while Apple’s stock rose 0.4%, closing at $3.52 trillion.

This record valuation also follows Nvidia’s recent move past Apple to take second place. Microsoft, currently valued at $3.18 trillion, closed with its stock up 0.8%, Reuters reported.

Nvidia, the primary supplier of processors powering AI computing, continues to lead as companies like Microsoft, Alphabet, and Meta compete for dominance in this transformative field.

Worlds Most Valuable Company 2024 (Credit: Reuters)

This achievement highlights the increasing demand and influence of artificial intelligence (AI). Nvidia controls about 80% of the AI chip market for data centers, a sector that has expanded rapidly as companies like OpenAI, Microsoft, Alphabet, Amazon, and Meta scramble to acquire the necessary processors to build AI models and manage growing workloads.

In the latest quarter, Nvidia’s data center revenue soared by 427% from the previous year, reaching $22.6 billion. This segment now represents approximately 86% of Nvidia’s total sales, according to a report from CNBC.

Nvidia’s rise to the top is a relatively recent phenomenon. For years, Apple and Microsoft have alternated as the most valuable U.S. company. Nvidia’s rapid ascent has been so swift that it hasn’t yet been included in the Dow Jones Industrial Average, the index of 30 of the most valuable U.S. companies. Last month, Nvidia announced a 10-for-1 stock split, which took effect on June 7.

Despite Nvidia’s impressive gains, Microsoft shares have also seen a 20% increase this year. The tech giant has benefited significantly from the AI boom, thanks to its substantial investment in OpenAI and the integration of AI models into key products like Office and Windows. Microsoft is one of Nvidia’s largest customers, utilizing its GPUs for its Azure cloud service and releasing a new generation of AI-optimized laptops called Copilot+.

The Secret to Nvidia’s Success

What drives Nvidia’s extraordinary growth? The surging demand for generative AI tools like ChatGPT has played a crucial role. Nvidia’s advanced chip technology has positioned it at the forefront of the AI industry, which is poised to have a profound impact on the future.

Nvidia’s GPUs are essential for running generative AI platforms such as OpenAI’s ChatGPT and Google’s Bard. While Nvidia has long dominated the discrete GPU market, primarily associated with high-performance gaming, its GPUs are now crucial in AI and machine learning.

The success of ChatGPT has caught the attention of major tech companies like Alphabet and Microsoft, who are now leveraging the potential of generative AI. These sophisticated systems can engage in human-like conversations and create various content, ranging from jokes to poetry.

A Legacy of Innovation

Founded in 1991 by CEO Jensen Huang, Chris Malachowsky, and Curtis Priem, Nvidia has a rich history of GPU design and manufacturing innovation. Initially focused on gaming, Nvidia has broadened its scope to make significant advancements in artificial intelligence. The company’s contributions to AI and the gaming industry have established it as a tech powerhouse.

For many years, Nvidia primarily sold chips for gamers to run 3D titles. It also ventured into cryptocurrency mining chips and cloud gaming subscriptions. However, over the past two years, Nvidia’s shares have skyrocketed as Wall Street recognized the company’s technology as the driving force behind the explosive growth of AI. According to Forbes, this rally has increased co-founder and CEO Jensen Huang’s net worth to approximately $117 billion, placing him as the 11th wealthiest person globally.

As Nvidia continues to innovate and lead the AI chip market, its future looks even brighter. With a commitment to launching new AI chips annually, starting with the upcoming Blackwell B200 GPU, Nvidia is set to shape the future of technology.