Nvidia Overtakes Apple as World’s Most Valuable Company Amid AI Chip Demand Surge

Nvidia surpassed Apple as the world’s most valuable company on Friday, reaching a record-high market valuation fueled by soaring demand for its specialized AI chips.

Nvidia’s market value briefly climbed to $3.53 trillion, just edging out Apple’s $3.52 trillion, according to LSEG data. The day ended with Nvidia up 0.8% at $3.47 trillion, while Apple rose 0.4% to close at $3.52 trillion.

The two companies, alongside Microsoft, which currently holds a $3.18 trillion valuation, have been closely matched in market cap for months. Nvidia previously claimed the top spot briefly in June before Apple and Microsoft reclaimed it.

As the leading supplier of processors for AI computing, Nvidia has emerged as a dominant force in the tech sector, outpacing competitors like Microsoft, Alphabet, and Meta in the push to control AI technology. Nvidia, originally known for designing gaming processors, has seen its stock jump by about 18% in October, following OpenAI’s announcement of a $6.6 billion funding round.

Semiconductor stocks, including Nvidia, received an additional boost on Friday after Western Digital reported quarterly profits that surpassed analysts’ predictions, sparking renewed optimism for data center demand. “There’s sustained demand for Nvidia’s AI chips as more companies integrate AI into daily operations,” noted Russ Mould, investment director at AJ Bell. “As long as the U.S. economy remains stable, companies are expected to continue investing in AI, creating strong tailwinds for Nvidia.”

Nvidia shares reached a new peak on Tuesday, building on momentum after TSMC, the largest contract chipmaker globally, reported a 54% quarterly profit surge driven by increased demand for AI chips.

Conversely, Apple is facing weaker demand for iPhones, with a 0.3% drop in third-quarter sales in China, while Huawei saw a 42% increase in phone sales. Analysts anticipate Apple’s revenue to rise by 5.55% to $94.5 billion in its upcoming earnings report, while Nvidia’s revenue is expected to skyrocket by nearly 82% to $32.9 billion.

The collective influence of Nvidia, Apple, and Microsoft is substantial, with these companies representing roughly 20% of the S&P 500 index’s weight. The overall stock market has been buoyed by optimism around AI, potential Federal Reserve interest rate cuts, and strong early earnings reports, with the S&P 500 reaching an all-time high last week.

Nvidia’s substantial gains have also drawn the attention of options traders, making it one of the most traded stocks in recent months. The stock has surged nearly 190% this year, driven by the generative AI boom and a series of bullish forecasts from Nvidia.

“The real question is whether Nvidia’s revenue stream will be sustained long-term or if it’s being driven by investor excitement without concrete evidence to either confirm or debunk the AI trend,” remarked Rick Meckler, a partner at Cherry Lane Investments. He added, “In the near term, Nvidia’s performance looks promising.”

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