This month, Nvidia has achieved a historic achievement by overtaking Apple to become the world's second most valuable company, a feat that has only been possible because of the overwhelming demand for its advanced chips that are used to handle artificial intelligence tasks. A staggering $1.8 trillion has been added to the market value of the Santa Clara, California-based company's shares over the past year, increasing its market value by a staggering 147% this year.
Nvidia has achieved a market capitalisation of over $3 trillion as a result of this surge, becoming the first semiconductor company to achieve this milestone. The value of Nvidia's shares has skyrocketed over the past few years, making it the second most valuable company in the world and larger than Apple, thanks to its surge in value. As a consequence of the excitement regarding artificial intelligence, which is largely based on Nvidia chips, the company has seen its shares rise dramatically over the past few years.
The popularity of the company has resulted in it becoming the largest company in Silicon Valley, which has led it to replace Apple, which has seen its share price fall due to concerns regarding iPhone sales in China and other concerns. Several weeks from now, Nvidia will be split ten times for ten shares, a move that could greatly increase the appeal of its stock to investors on a personal level. Nvidia’s surge over Apple’s market value signals a shift in Silicon Valley, where the co-founded company by Steve Jobs has dominated the field since the iPhone was launched in 2007. While Apple gained 0.78 per cent, the world’s most valuable company, Microsoft gained 1.91 per cent in value.
As a result of the company’s graphics processing units fuelling a boom in artificial intelligence (AI), Nvidia’s rally continues an extraordinary streak of gains for the company. There has been a 260 per cent increase in revenue for the company in recent years, as tech titans such as Microsoft, Meta, Google, and Amazon race to implement artificial intelligence.
Last month, Nvidia announced a 10-for-1 stock split as a way of making stock ownership more accessible to employees and investors. In the first half of this year, Nvidia shares have more than doubled in value after almost tripling in value in 2023.
With the implementation of the split on Friday, the company will be able to appeal to a larger number of small-time investors, as the company's shares will become even more attractive.
As a consequence of Microsoft, Meta Platforms, and Alphabet, all of these major tech companies are eager to enhance their artificial intelligence capabilities, which is why Nvidia's stock price has surged 147% in 2024. According to recent revenue estimates, the company's stock has gained close to $150 million in market capitalisation in one day, which is more than the entire market capitalization of AT&T. As well as a 4.5% increase in the PHLX chip index, many companies have benefited from the current optimism surrounding artificial intelligence, including Super Micro Computer, which builds AI-optimized servers using Nvidia chips.
During his visit to the Computex tech fair in Taiwan, former Taipei resident Jensen Huang, chairman & CEO of Nvidia, received extensive media coverage that highlighted both his influence on the company's growing importance as well as his association with the event. Compared to Apple, there are challenges facing Apple due to weak demand for iPhones in China and stiff competition from its Chinese competitors. According to some analysts, Apple misses out on incorporating AI features compared to other tech giants because the company has been so slow in incorporating them.
According to LSEG data, Nvidia's stock trades today at 39 times expected earnings, but the stock is still considered less expensive than a year ago, when the stock traded at more than 70 times expected earnings, indicating it's less expensive than it used to be.