Nvidia Hits $3 Trillion Milestone, Surpassing Apple to Become World's Second Most Valuable Company

Nvidia (NASDAQ: NVDA) experienced a remarkable ascension on Wednesday, hitting unprecedented highs and achieving a valuation surpassing $3 trillion. This milestone propelled the artificial intelligence chipmaker past Apple (NASDAQ: AAPL) to become the second most valuable company globally. The shift signals a significant change in the balance within Silicon Valley, a realm Apple has primarily ruled since the launch of the iPhone in 2007.

As Nvidia prepares to execute a ten-for-one stock split effective June 7, the move is likely to entice more individual investors, increasing its market traction. The surge saw Nvidia’s stock leap by 5.2%, closing at $1,224.40, and resulting in a company valuation of $3.012 trillion. Meanwhile, Apple's stock saw a modest rise of 0.8%, bringing its market capitalization to $3.003 trillion. Microsoft (NASDAQ: MSFT), hailing from Redmond, Washington, retained its crown as the world's most valuable company with a $3.15 trillion valuation after a 1.9% increase in its share price.

"Currently, Nvidia is raking in profits from AI, while companies such as Apple and Meta Platforms (NASDAQ: META) are still heavily investing in AI technologies," stated Jake Dollarhide, CEO of Longbow Asset Management. He added, "It may only be a matter of time before Nvidia also surpasses Microsoft. Retail investors are pouring money into Nvidia, seeing it as a guaranteed upward trajectory."

Nvidia’s stock has surged an incredible 147% so far in 2024, primarily driven by overwhelming demand for its cutting-edge processors. Tech giants like Microsoft, Meta Platforms, and Alphabet (NASDAQ: GOOGL) are competing vigorously to build and expand their AI computing infrastructures. Nvidia’s recent revenue forecast, exceptionally well-received by the market, has fuelled a near 30% rise in its stock since May 22.

On this record-breaking Wednesday alone, Nvidia’s market capitalization grew by nearly $150 million—more than the entire valuation of AT&T (NYSE: T). The monumental performance also caused a broad uplift in chip stocks, pushing the PHLX chip index up by 4.5%. Super Micro Computer (NASDAQ: SMCI), known for its AI-optimized servers incorporating Nvidia chips, saw a 4% climb.

Interestingly, Nvidia’s CEO Jensen Huang found himself at the epicenter of intense media attention during his visit to the Computex tech trade fair in Taipei, where he was mobbed by enthusiastic attendees. This spectacle underscores Nvidia's growing influence and the high expectations surrounding its future.

In contrast, Apple finds itself grappling with weaker iPhone demand and stiff competition in China, the largest smartphone market globally. Some investors perceive Apple as lagging behind its tech peers in integrating AI features into its products and services.

Analysts are bullish on Nvidia’s future earnings, projecting growth metrics that even outshine its soaring stock performance. Nvidia’s current trading multiple of 39 times expected earnings showcases a stark improvement compared to last year when it traded at over 70 times expected earnings, as per LSEG data.

Indeed, Nvidia’s extraordinary climb past Apple symbolizes a notable shift and heralds intriguing times ahead for investors as they navigate this rapidly evolving tech landscape.