AI chipmaker Nvidia has become the world’s most valuable company after it dethroned tech heavyweight Microsoft from the top spot.
The company’s shares jumped 3.5 percent to $135.58 as its market capitalization increased to $3.335 trillion on Tuesday.
Nvidia’s stock rally has taken the indexes of S&P 500 and Nasdaq to an all-time high. Encouraged by IT behemoths like Microsoft, Meta and Google’s insatiable demand for its chips, the company’s stock price has increased by more than 182 percent this year alone, following a more than threefold increase in 2023.
What led to Nvidia’s growth?
Nvidia has reached new heights as a result of the generative artificial intelligence boom, which was sparked by the introduction of OpenAI’s ChatGPT in late 2022 and increased demand for the company’s specialized AI processors. Since then, the company’s worth has increased on an almost vertical rise from around $400 billion in late 2022 to $1 trillion by mid-2023, $2 trillion by early 2024, and $3 trillion by mid-2024.
This change in the rankings emphasizes how crucial AI is to investors. It is believed that Nvidia is the leader and primary beneficiary of AI technology becoming more extensively used. The company’s highly sought-after semiconductors have given it a commanding market position.
Market capitalization battle among tech giants
For the first time in more than 20 years, Nvidia’s market valuation eclipsed Apple’s earlier this month. The two tech giants have been battling it out for the top spot ever since. Last week, Apple briefly surpassed Microsoft as the leader.
There is a lot of competition among AI developers. Tech giants Apple, Microsoft, Alphabet, which owns Google, and Meta, are just a few of those competing to produce a product that can compete globally. Nvidia, which leads the majority of the AI chip market and is also developing AI technology of its own, seems to be gaining from this competition.
Nvidia’s brief journey
Nvidia holds about 80 percent of the market for AI chips, which are required in data centres to run AI models like OpenAI’s ChatGPT. The company’s stock has surged 591,078 percent since it made stock market debut in 1999. For the first couple of decades of its existence, Nvidia’s primary focus was on creating semiconductors for video games. However, in order to position the company to benefit from the rise of AI, Nvidia chief executive Jensen Huang ordered significant investments to be made in the development of GPUs for uses other than gaming during the 2000s.
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