Nvidia Becomes World’s Most Valuable Company, Surpassing Microsoft and Apple

Nvidia has achieved the status of the world's most valuable company following a surge in its share price to an all-time high on Tuesday. The stock closed at nearly $136, a 3.5% increase, elevating Nvidia above Microsoft in market value, a milestone it previously reached over Apple earlier this month.

The company's success is largely attributed to its production of computer chips essential for artificial intelligence (AI) software, a sector experiencing substantial growth in demand. This surge in demand has significantly boosted Nvidia's sales and profits over recent years. Investor confidence in the company's continued earnings growth has propelled its share price, despite some concerns about its lofty valuation.

With the latest stock rally, Nvidia's market valuation has soared to $3.34 trillion (£2.63 trillion), marking a near doubling of its stock price since the start of the year. Remarkably, the stock was valued at less than 1% of its current price just eight years ago.

The fierce competition among AI developers, including major tech companies like Microsoft, Alphabet (Google's parent company), Meta, and Apple, has further benefited Nvidia. The company maintains a dominant position in the AI chip market, reinforcing investor belief in its future value appreciation. Nvidia's financial performance has consistently exceeded analysts' expectations in recent years.

In May, following the release of its latest financial results, Ben Barringer, a technology analyst at Quilter Cheviot, noted that Nvidia had "once again cleared a very high hurdle," emphasizing the sustained demand for its products.

Despite the optimistic outlook, some analysts remain cautious. In February, Sandeep Gupta, a credit analyst at Barclays, highlighted the challenge Nvidia faces in maintaining its substantial market share amid rising competition. He also questioned the monetization potential of AI software by Nvidia's customers.

Overall, Nvidia's remarkable ascent underscores the critical role of AI technology in shaping the future of the tech industry, with the company at the forefront of this transformative trend.