Nvidia‘s shares on Wednesday went more than 5% to a record high of $1,224.40. This surge pushed the company’s market capitalization above $3 trillion for the first time, making it the second most valuable company in the United States, surpassing Apple. Microsoft remains the most valuable company.

Nvidia Surpasses $3 Trillion Market Cap, Overtakes Apple as Second Largest US Company

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On Wednesday, Nvidia’s market capitalization reached $3 trillion with its shares rising over 5%. By market close, Nvidia’s market value was $3.019 trillion, compared to Apple’s $2.99 trillion.

Microsoft remains the most valuable publicly traded company with a market cap of $3.15 trillion as of the same day.

Nvidia’s shares have soared more than 24% since the company reported its first-quarter earnings in May. The company’s shares have been on an upward trajectory since last year.

Apple’s shares have only increased by about 5% this year, as the tech giant faces slowing sales growth.

Nvidia holds an estimated 80% market share in AI chips for data centers. This sector has seen massive investments from major cloud service providers.

In the most recent quarter, Nvidia’s data center business which includes GPU sales saw a 427% year-over-year increase, generating $22.6 billion and accounting for approximately 86% of the company’s total sales.

Investors are increasingly optimistic about Nvidia’s ability to sustain its rapid sales growth, primarily driven by demand from cloud companies.

This confidence is reflected in Nvidia’s stock prices, which have surged more than 3,290% over the past five years.

The company’s moves such as a 10-for-1 stock split announced in May, aim to make shares more accessible to small investors further driving demand.

The last time Nvidia’s market value surpassed Apple’s was in 2002, a period when both companies were valued under $10 billion each. This was five years before Apple launched its first iPhone, which altered its market trajectory.

Jensen Huang, Nvidia’s co-founder and CEO has been a main figure in the company’s rise. During the Nvidia GPU Technology Conference (GTC) in March 2024.

He described the ongoing AI revolution as the dawn of the next industrial revolution, positioning Nvidia as a central player in this era.

Nvidia’s strategy has evolved significantly from its early days of targeting the gaming industry with 3D computer game hardware.

The company later ventured into cryptocurrency mining chips and cloud subscription services. Currently, Nvidia’s focus on AI and machine learning has cemented its role as a critical supplier of technology that powers AI-driven innovations.

In the three months ending April 28, 2024, Nvidia reported sales of $26 billion, marking a more than threefold increase from the same period in 2023 and an 18% rise from the previous quarter.

Apple, the first company to reach $1 trillion and $2 trillion market cap milestones has now experienced slower growth recently.

In its latest quarterly earnings report, Apple disclosed a 4% decline in overall sales and a 10% drop in iPhone sales from the previous year.

The company faces challenges including fluctuating demand in China, manufacturing issues and mixed reactions to its new virtual reality headset, Vision Pro.

Apple’s shares have seen a slight uptick in recent weeks driven by investor anticipation regarding its AI strategy.

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Market analysts and investors view Nvidia’s trajectory positively. Angelo Zino, senior equity analyst at CFRA Research expressed confidence in Nvidia’s future, citing improved visibility and momentum in the GPU/CPU/networking sectors.

This sentiment is shared by many on Wall Street, who foresee Nvidia potentially overtaking Microsoft as the most valuable company.

Nvidia’s CEO Jensen Huang addressed the company’s commitment to annual upgrades of its AI accelerators.

With a current market cap of $3 trillion, Nvidia is on a path that could see it surpass Microsoft, which currently holds a market cap of $3.15 trillion.

The company’s decisions including the 10-for-1 stock split and a 150% increase in its quarterly dividend are designed to attract a wide range of investors.

Nvidia has become the poster child for investor enthusiasm in artificial intelligence (AI). The company’s fortunes accelerated following OpenAI’s release of ChatGPT in late 2022.

This year, Nvidia’s stock is up over 140%, and it has soared 200% over the last year. Over a five-year period, Nvidia shares have skyrocketed by more than 3,300%. The Nasdaq index has seen gains of 14%, 29%, and 126% over the same periods, respectively.

Nvidia shares remained steady in pre-market trading on Thursday, with a slight increase of less than 1%. The company also announced a 10-for-1 stock split, effective June 7. The split is expected to make the shares even more attractive to smaller investors.

At an industry conference on Sunday, Nvidia’s CEO Jensen Huang announced plans to release a high-powered version of its Blackwell chip named the Blackwell Ultra, in 2025.

This will be followed by a new AI chip platform, Rubin, in 2026 and an Ultra version of Rubin in 2027.

Nvidia reported financial results for the first quarter with adjusted earnings per share of $6.12 on revenue of $26 billion.

These figures represent increases of 461% and 262%, respectively, compared to the same period last year.

The company’s Data Center segment was the standout performer with revenue increasing 427% year-over-year to $22.6 billion, accounting for 86% of total revenue. Nvidia’s gaming segment reported revenue of $2.6 billion.

AMD and Intel are advancing their AI chip offerings with the goal of capturing market share from Nvidia.

AMD plans to release its MI325X and MI350 in 2024 and 2025, respectively, followed by the MI400 AI accelerator platform in 2026.

Intel, on the other hand is focusing on cost-effective solutions with its Gaudi 2 and Gaudi 3 AI accelerators, which aim to undercut Nvidia on price.

Nvidia’s major customers including Amazon, Google, and Microsoft are exploring ways to reduce their dependence on Nvidia’s chips to save on capital expenditures.

Nvidia announced an increase in its quarterly dividend from $0.04 per share to $0.10 per share.

Nvidia’s rise to a market capitalization of over $3 trillion places it in an elite group of US companies. Microsoft and Apple, which has seen its market cap fluctuate around $2.99 trillion and are the only other US companies to have reached such heights.

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