Nvidia CEO Jensen Huang attends an event at COMPUTEX forum in Taipei, Taiwan June 4, 2024.Ann Wang | Reuters
Nvidia, the chipmaker renowned in the gaming world, has ascended to the pinnacle of market valuation, surpassing tech giant Microsoft. This milestone makes Nvidia the most valuable public company globally, with a market cap exceeding $3.34 trillion.
Nvidia’s Meteoric Rise
Shares of Nvidia surged by 3.6% on Tuesday, pushing the company’s market cap past Microsoft’s $3.32 trillion. This achievement follows Nvidia’s historic crossing of the $3 trillion mark earlier in June, a feat that also saw it outpace Apple. The stock’s remarkable performance, up over 170% this year, highlights its critical role in the burgeoning field of generative artificial intelligence.
Nvidia’s dominance is evident in its commanding 80% share of the AI chip market for data centers. This sector has expanded rapidly as tech behemoths like OpenAI, Microsoft, Alphabet, Amazon, and Meta acquire processors essential for AI model development and handling substantial computational workloads.
Surging Revenue and Strategic Shifts
Nvidia’s data center business, a significant revenue driver, reported a 427% year-over-year increase in the most recent quarter, generating $22.6 billion and accounting for 86% of the company’s total sales. Founded in 1991, Nvidia initially focused on hardware for 3D gaming, later exploring cryptocurrency mining and cloud gaming.
In recent years, however, Nvidia’s stock has skyrocketed, reflecting Wall Street’s recognition of its pivotal role in AI technology. This surge has elevated CEO Jensen Huang’s net worth to approximately $117 billion, positioning him as the 11th richest individual globally.
Impact on Microsoft and Market Dynamics
Microsoft, though up 20% this year, has also benefited significantly from the AI revolution. The software giant’s substantial investment in OpenAI and the integration of AI into key products like Office and Windows underscore its commitment to leveraging AI advancements. Microsoft is also a major purchaser of Nvidia’s GPUs for its Azure cloud service, with the recent launch of AI-optimized laptops, branded as Copilot+, further cementing this partnership.
Nvidia’s swift ascent to becoming the most valuable U.S. company is notable, particularly as it has yet to be included in the Dow Jones Industrial Average. The recent 10-for-1 stock split, effective June 7, enhances Nvidia’s prospects for joining the Dow, a price-weighted index where higher stock prices hold greater influence.
Future Prospects and Market Position
Nvidia’s rapid rise in market cap underscores its pivotal role in the tech industry’s AI-driven future. With significant stakes in AI chip production and strategic partnerships across major tech firms, Nvidia is well-positioned to maintain its market leadership. The company’s ability to adapt and innovate will be crucial as it navigates the evolving landscape of artificial intelligence and its applications.
In summary, Nvidia’s surpassing of Microsoft in market cap marks a significant milestone in the tech industry. As the AI revolution continues to unfold, Nvidia’s strategic advancements and market positioning highlight its critical role in shaping the future of technology.
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