Oct 25 – Nvidia, opens new tab usurped Apple, opens new tab as the world’s most valuable company on Friday after a record rally in the stock, fueled by insatiable demand for its specialized artificial intelligence chips.
Nvidia’s stock market value briefly touched $3.53 trillion, slightly above Apple’s $3.52 trillion, LSEG data showed.
Nvidia ended up 0.8% on the day at an market value of $3.47 trillion, while Apple’s shares added 0.4% giving the iPhone maker a valuation of $3.52 trillion.
Nvidia briefly reached the top spot in June but then gave way to Microsoft and Apple. The market capitalizations of the three have largely been neck and neck for the past months.
Microsoft was valued at $3.18 trillion, its stock 0.8% higher.
The Silicon Valley chipmaker becomes the dominant supplier of processors used in AI computing with this deal, emerging as the biggest winner in a race between Microsoft, Alphabet GOOGL.O, opens new tab, Meta Platforms META.O, opens new tab, and other heavyweights that aim to rule this emerging technology.
A designer of processors for videogames since the 1990s, Nvidia’s stock has surged about 18% so far in October, on a string of gains after OpenAI, the company behind ChatGPT, announced a funding round of $6.6 billion.
Nvidia and other semiconductor stocks rose on Friday after data storage maker Western Digital reported quarterly profit that beat analysts’ estimates, buoying optimism about data centre demand.
“More companies are now embracing artificial intelligence in their everyday tasks and demand remains strong for Nvidia chips,” said Russ Mould, investment director at AJ Bell.
“It is certainly in a sweet spot, and so long as we avoid a big economic downturn in the US, there’s a feeling that companies will continue to invest heavily in AI capabilities, which creates a healthy tailwind for Nvidia.
Nvidia shares climbed to an all time high on Tuesday, extending a rally from last week when TSMC, the world’s largest contract chipmaker, posted a forecast beating 54% jump in quarterly profit on surging demand for chips used in AI.
Meanwhile, Apple confronts ho-hum demand for its phones. Sales of iPhones in China inched 0.3% lower in the third quarter while those from rival Huawei leapt 42%.
For Apple, set to report quarterly results Thursday, the average analyst estimate is for revenue to increase 5.55% year over year to $94.5 billion, according to LSEG data.
That contrasts with analysts’ forecasts for Nvidia of revenue growth of almost 82% to $32.9 billion.
Shares of Nvidia, Apple, and Microsoft have greater than usual influence on the richly valued tech sector as well as the broader US stock market, since the trio comprises around a fifth of the S&P 500 index.
Optimism about AI prospects, expectations of big cuts to U.S. interest rates by the Federal Reserve, and then a healthy start to the earnings season most lately have helped lift the benchmark S&P 500 to an all time high last week.
Nvidia’s enormous gains have helped boost the stock’s appeal for option traders, and the company’s options rank among the most traded on any given day in recent months, according to data from options analytics provider Trade Alert.
The stock is up almost 190% so far this year as the boom in generative AI led to a series of blowout forecasts from Nvidia.
“The question is whether the revenue stream will be long lasting and driven by emotion from investors, rather than anything that can prove or disprove a thesis that AI is overdone,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“I think Nvidia knows that near term, their numbers are likely to be quite remarkable.”
