Market Analysis

Nvidia reached record highs on Wednesday, with the AI chipmaker's valuation surpassing $3 trillion and overtaking Apple (NASDAQ) to become the world's second most valuable company.

Nvidia (NASDAQ) is set to implement a ten-for-one stock split on June 7, which could enhance its attractiveness to individual investors.

This surge in Nvidia's market value above Apple's signifies a notable shift in Silicon Valley, where Apple, co-founded by Steve Jobs, has reigned supreme since the launch of the iPhone in 2007.

Nvidia's stock increased by 5.2%, closing at $1,224.40, which brought the company's valuation to $3.012 trillion. Apple's market capitalization stood at $3.003 trillion after a 0.8% rise in its stock price.

Microsoft (NASDAQ), based in Redmond, Washington, remains the world's most valuable company at $3.15 trillion, following a 1.9% increase in its shares.

"Nvidia is currently profiting from AI, whereas companies like Apple and Meta are investing heavily in AI," noted Jake Dollarhide, CEO of Longbow Asset Management.

"It's conceivable that Nvidia will also surpass Microsoft. There's a substantial influx of retail investment, driven by the perception of a straightforward upward trajectory."

Nvidia's stock has surged 147% in 2024, fueled by high demand for its leading processors, as companies like Microsoft, Meta Platforms (NASDAQ), and Alphabet (NASDAQ), owner of Google, race to enhance their AI capabilities and dominate this emerging technology.

Since May 22, when Nvidia announced its latest impressive revenue forecast, the stock has rallied nearly 30%.

On Wednesday, Nvidia added nearly $150 million in market capitalization, exceeding the entire value of AT&T (NYSE).

AI optimism boosted chip stocks broadly on Wednesday, with the PHLX chip index rising 4.5%. Super Micro Computer (NASDAQ), which sells AI-optimized servers built with Nvidia chips, also saw a 4% increase.

Nvidia CEO Jensen Huang received extensive media coverage on Taiwanese television this week and was greeted enthusiastically by attendees at the Computex tech trade fair in Taipei, where he was born before relocating to the United States.

While Nvidia enjoys a wave of AI enthusiasm on Wall Street, Apple faces weak demand for iPhones and stiff competition in China, the world's largest smartphone market.

Some investors believe Apple lags behind other tech giants in integrating AI features into their products and services.

Analysts' projections for Nvidia's future earnings have outpaced its stellar stock gains. Nvidia is trading at 39 times expected earnings, making it less expensive on that basis than a year ago when it traded at over 70 times expected earnings, according to LSEG data.

Paraphrasing text from "Reuters" all rights reserved by the original author.