Nvidia's shares jumped 5 percent to reach $1,224.40 on Wednesday, taking the company's market value above $3 trillion for the first time. This surge comes as investor interest continues to grow in Nvidia, which is at the heart of the boom in generative AI. Nvidia has now surpassed Apple to become the second-largest public company, just behind Microsoft.
This achievement is part of a remarkable trend, with Nvidia's stock price rising by over 3,224% in the past five years. Additionally, the company will undergo a 10-for-1 stock split later this month. Microsoft, the world's most valuable company, saw its stock rise by 1.91 percent, while Apple's stock gained 0.78 percent.
NVIDIA's Rally Continues
Apple was the first U.S. company to reach a $3 trillion market cap during intraday trading in January 2022. Microsoft achieved a $3 trillion market value in January 2024. Nvidia, founded in 1993, reached a $2 trillion valuation in February and took roughly three months to surpass $3 trillion.
Nvidia's impressive rally is being powered by the company's graphics processing units that have sparked a boom in artificial intelligence (AI). Over the past year, Nvidia's revenues have soared by more than 260 percent as tech giants like Microsoft, Meta, Google, and Amazon rush to develop AI technologies.
Year to date, Nvidia's shares have more than doubled, following a tripling in value in 2023.
Last month, Nvidia announced a 10-for-1 stock split to make stock ownership more accessible to employees and investors. This split, which takes effect on Friday, is expected to make the company's shares even more attractive to investors.
In May, Nvidia reported first-quarter earnings that highlighted continued strong demand for its expensive and powerful graphics processing units (GPUs).
The company reported overall sales of $26 billion, more than triple what it made a year ago. Nvidia also exceeded Wall Street expectations for sales and earnings and projected revenue of about $28 billion for the current quarter.
No Stopping NVIDIA
This week's rally in Nvidia's stock follows an announcement on Sunday by CEO Jensen Huang. Speaking at an industry conference, he revealed that the company will release a high-powered version of its Blackwell chip, called 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 is the tech industry's leading supplier of AI chips and integrated software.
Tech giants, including Amazon, Google, Meta, Microsoft, and Tesla, use Nvidia's hardware to power their cloud-based AI offerings for customers as well as their own AI models and services.
However, Nvidia isn't the only player in the AI chip market. AMD and Intel are advancing their own AI chips to challenge Nvidia. AMD has announced its MI325X and MI350 chips, which will be available in 2024 and 2025, respectively, and its next-generation MI400 AI accelerator platform, set to launch in 2026.
Intel has introduced its Gaudi 2 and Gaudi 3 AI accelerators, which promise to be more cost-effective than competing chips. With companies investing billions in AI chips, any cost savings will be significant.
Nvidia also faces growing competition from its own customers. Amazon, Google, and Microsoft are working to reduce their reliance on Nvidia's chips to save on capital expenditures.
Despite these challenges, Nvidia continues to dominate the AI space and is expected to maintain its leading position in the near term.
