Nvidia overtakes Microsoft as the world’s most valuable stock

Nvidia (NVDA) overtook Microsoft (MSFT) on Tuesday as the world’s most valuable company, just two weeks after taking second place from Apple (AAPL).

Nvidia’s share price rose nearly 4%, surpassing $136 per share and giving the chipmaker a market capitalization of more than $3.35 trillion. With a 0.3% drop on Tuesday, Microsoft’s market value stood at $3.32 trillion.

Nvidia shares are up more than 215% in the last 12 months and more than 3,400% in the last five years. Year to date, Nvidia has gained 175%; Microsoft shares are up just under 19% in 2024.

Nvidia surpassed $1 trillion market cap for the first time on June 13, 2023. Shares advanced north of $2 trillion on March 1 and then quickly crossed the $3 trillion mark for the first time on June 5th. The $3 trillion market capitalization was the fastest on record.

Nvidia’s rise has made it a standout position in the S&P 500 (^GSPC), and the chipmaker has played a key role in the benchmark index, reaching record highs in 2024.

Until May, the S&P 500 had traded with a near-perfect correlation to Nvidia’s price movement, meaning that as Nvidia shares rose, so did the broader index. On Monday, Nvidia stock gains alone contributed about a third of the S&P 500’s year-to-date increase, according to data from Citi’s equity research team.

Nvidia completed a 10-for-1 split on June 10.

The company’s rise comes amid the generative AI explosion that began when OpenAI debuted its ChatGPT platform in late 2022. Nvidia’s chips, modified graphics cards and CUDA software platform are designed to train and run AI programs, giving gives it a strategic advantage that experts say rivals AMD and Intel will take years to overcome.

Nvidia is the technology industry’s preferred supplier of AI chips and embedded software.

Tech giants including Amazon (AMZN), Google (GOOG), Meta (META), Microsoft, Tesla (TSLA) and others use their hardware to power everything from their cloud-based AI offerings for customers to their own models of AI and Services.

During a keynote at the Computex conference in Taiwan on June 2, CEO Jensen Huang announced that the company will launch a high-power version of its Blackwell chip – called Blackwell Ultra – in 2025, followed by a new AI chip platform, Rubin , in 2026. The company will launch an Ultra version of Rubin in 2027.

In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, jumps of 461% and 262%, respectively, from the same period a year ago.

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Nvidia’s data center revenue for the most recent quarter increased 427% year over year to $22.6 billion, representing 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its most important business, reported revenue of $2.6 billion.

But AMD (AMD) and Intel (INTC) are pushing ahead with their own AI chips with the aim of overtaking Nvidia. AMD recently announced that its MI325X and MI350 will hit the market in 2024 and 2025, respectively, and said that its next-generation MI400 AI accelerator platform will arrive in 2026.

Meanwhile, Intel said its Gaudi 2 and Gaudi 3 AI accelerators will undercut competing chips in price. And with companies spending billions on AI chips, any price savings will certainly be welcome.

Nvidia is also facing increasing competition from its own customers as Amazon, Google and Microsoft seek to free themselves from dependence on the company’s chips and save on capital expenses while doing so.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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