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    Nvidia Surpasses Microsoft to Become the World’s Most Valuable Company

    nephilaBy Business And Money 4 Mins Read

    With Nvidia powering Microsoft, Tesla and all AI companies, we will assume from here there is far more upside to their stock over the next few years.

    On Tuesday, Nvidia (NVDA) achieved the distinction of becoming the most valuable company in the world, surpassing Microsoft (MSFT). This milestone comes just two weeks after Nvidia claimed the second spot from Apple (AAPL), marking a significant shift in the tech industry’s valuation hierarchy. Nvidia’s stock price surged by approximately 3.5%, reaching over $135 per share and bringing its market capitalization to more than $3.33 trillion. In contrast, Microsoft experienced a slight decline of 0.4% on the same day, bringing its market cap to nearly $3.32 trillion.

    Over the past year, Nvidia’s shares have increased by more than 215% and have seen a staggering rise of over 3,400% in the last five years. In 2024 alone, Nvidia has seen an impressive gain of 175%, significantly outpacing Microsoft’s increase of just under 19%.

    Nvidia’s financial journey reached a major milestone on June 13, 2023, when it crossed a $1 trillion market cap. The company’s value continued to climb rapidly, surpassing $2 trillion by March 1, and exceeded the $3 trillion mark for the first time on June 5. This growth from $1 trillion to $3 trillion in market cap was the fastest ever recorded.

    The chipmaker has become a key player in the S&P 500, contributing significantly to the index’s record highs in 2024. Until May, the S&P 500 exhibited a near-perfect correlation with Nvidia’s stock performance, and Nvidia’s gains have accounted for about one-third of the S&P 500’s increase this year, as per data from Citi’s equity research team.

    Nvidia’s prominence in the tech sector has been further bolstered by the explosion of generative AI, initiated by OpenAI’s introduction of its ChatGPT platform in late 2022. Nvidia’s specialized graphics cards and CUDA software platform, designed for AI training and operations, provide it with a competitive edge that is expected to take years for competitors like AMD (AMD) and Intel (INTC) to match.

    The company is now the preferred supplier of AI chips and software for tech giants such as Amazon (AMZN), Google (GOOG), Meta (META), Microsoft, Tesla (TSLA), and others. These firms utilize Nvidia’s technology for their AI-driven services, from cloud solutions to in-house AI models.

    At the Computex conference in Taiwan on June 2, Nvidia’s CEO Jensen Huang announced the upcoming release of the Blackwell Ultra chip in 2025 and a new AI chip platform named Rubin in 2026, with an advanced Ultra version of Rubin set to debut in 2027.

    For the first quarter, Nvidia reported a 461% increase in adjusted earnings per share at $6.12, with revenue soaring to $26 billion, up 262% from the previous year. The company’s data center revenue, which now forms 86% of its total quarterly revenue, grew by 427% to $22.6 billion. Meanwhile, the gaming segment, once its primary business, posted revenue of $2.6 billion.

    Despite its success, Nvidia faces challenges from AMD and Intel, who are advancing their AI chip technologies. AMD plans to launch its MI325X and MI350 chips in 2024 and 2025, respectively, and is developing a next-generation AI accelerator platform, MI400, for 2026. Intel is also progressing with its Gaudi 2 and Gaudi 3 AI accelerators, focusing on cost competitiveness.

    Moreover, Nvidia must work with increasing competition from its own clients like Amazon, Google, and Microsoft, who are working to reduce their reliance on Nvidia’s chips to decrease capital expenditures. Their CEO has an incredible attitude on it all, and is quite sharing, making his company even more esteemed and wanted among investors.

    Major Points:

    • Nvidia (NVDA) surpassed Microsoft (MSFT) to become the world’s most valuable company, with its market cap exceeding $3.33 trillion.
    • Nvidia’s stock has seen significant growth, with a 215% increase over the past year and over 3,400% in the last five years.
    • The company’s rapid valuation increase was bolstered by its pivotal role in the generative AI sector, utilizing its advanced chips and software.
    • Nvidia announced future plans for new AI chips at the Computex conference, including the Blackwell Ultra and Rubin platforms.
    • Despite its success, Nvidia faces increasing competition from rivals like AMD and Intel, as well as efforts from major clients like Amazon and Google to reduce their dependency on Nvidia’s technology.

    Fallon Jacobson – Reprinted with permission of Whatfinger News

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