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Nvidia Surpasses Apple, Becomes World’s Second Most Valuable Company

Nvidia rallied to record highs on Wednesday, with the artificial intelligence chipmaker’s valuation surpassing $3 trillion and overtaking Apple to become the world’s second most valuable company.

Nvidia is preparing to split its stock ten-for-one, effective June 7, a move that could increase its appeal to individual investors.

This surge in Nvidia’s market value above Apple’s marks a significant shift in Silicon Valley, which has been dominated by the company co-founded by Steve Jobs since the launch of the iPhone in 2007.

Nvidia’s stock rose 5.2% to end the day at $1,224.40, valuing the company at $3.012 trillion. Apple’s market capitalization stood at $3.003 trillion after its stock climbed 0.8%.

Microsoft, based in Redmond, Washington, remains the world’s most valuable company at $3.15 trillion after its shares climbed 1.9%.

“Nvidia is making money on AI right now, while companies like Apple and Meta are spending on AI,” said Jake Dollarhide, CEO of Longbow Asset Management. “It may be a foregone conclusion that Nvidia will overtake Microsoft as well. There’s a lot of retail money piling in on what they see as a straight shot up.”

Nvidia’s stock has surged 147% so far in 2024, driven by high demand for its top-of-the-line processors as Microsoft, Meta Platforms, and Google-owner Alphabet race to enhance their AI computing capabilities. Nvidia’s stock has rallied nearly 30% since May 22, following its latest stellar revenue forecast.

Nvidia added nearly $150 billion in market capitalization on Wednesday, more than the entire value of AT&T.

Optimism about AI lifted chip stocks broadly on Wednesday, with the PHLX chip index surging 4.5%. Super Micro Computer, which sells AI-optimized servers built with Nvidia chips, climbed 4%.

Nvidia CEO Jensen Huang has been the subject of extensive media coverage in Taiwan this week and was mobbed by attendees at the Computex tech trade fair in Taipei, where he was born before moving to the United States.

While Nvidia rides a wave of AI enthusiasm on Wall Street, Apple is struggling with weak demand for iPhones and tough competition in China, the world’s largest smartphone market. Some investors also view Apple as lagging behind other technology 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.

Source: Reuters

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