According to data from LSEG, Apple’s stock market value was $3.52 trillion, while Nvidia’s briefly reached $3.53 trillion.
Due to an unquenchable demand for its new supercomputing AI chips, Nvidia’s stock surged to a record high on Friday, surpassing Apple as the most valuable company in the world.
According to LSEG data, Apple’s stock market value was $3.52 trillion, while Nvidia’s briefly reached $3.53 trillion.
In June, Nvidia briefly topped the global valuation rankings before being overtaken by Apple and Microsoft. For several months, the three tech companies’ market capitalisations have been close to one another. The market value of Microsoft was $3.20 trillion.
Nvidia’s stock has risen about 18% so far in October, with a string of gains coming after OpenAI, the company behind ChatGPT, announced a funding round of $6.6 billion. Chips from Nvidia are used to train so-called foundation models, like the GPT-4 from OpenAI.
According to Russ Mould, investment director at AJ Bell, “more businesses are now embracing artificial intelligence in their everyday tasks and demand remains strong for Nvidia chips.”
“It is definitely in a sweet spot, and as long as the US economy does not experience a significant downturn, businesses are expected to keep making significant investments in AI capabilities, which will provide Nvidia with a healthy tailwind.”
Following a surge last week when TSMC, the largest contract chipmaker in the world, reported a forecast-beating 54% increase in quarterly profit due to the surge in demand for chips used in artificial intelligence, Nvidia’s shares reached a record high on Tuesday.
The next big test will be when Nvidia reports third-quarter results in November. According to data compiled by LSEG, Nvidia predicted third-quarter revenue in August of $32.5 billion, plus or minus 2%, compared with the current average analyst expectation of $32.90 billion.
In a note dated October 10, Morgan Stanley analyst Joseph Moore stated that while he is still “very bullish” about the company’s long-term prospects, the recent surge “raises the bar for earnings somewhat.”
After a meeting with Nvidia’s CEO Jensen Huang, Moore noted the ramp up in production of its next-generation Blackwell chips appeared to be “quite strong” and are booked out for 12 months. In August, Nvidia confirmed reports that the production of Blackwell chips was postponed until the fourth quarter, which put pressure on the stock.
With Nvidia, Apple, and Microsoft holding roughly a fifth of the weight of the S&P 500 index, their shares have a significant impact on the highly valued technology sector as well as the larger U.S. stock market.
The benchmark S&P 500 reached an all-time high last week due to a flurry of interest in AI, expectations that the U.S. Federal Reserve will significantly lower interest rates, and, most recently, a positive start to the earnings season.
The company’s options are among the most traded on any given day in recent months, according to data from options analytics provider Trade Alert, and Nvidia’s enormous gains have contributed to the stock’s increased appeal to option traders.
Due to a surge in generative AI, the company issued a number of blowout forecasts, which caused the stock to soar by nearly 190% so far this year.
Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey, stated, “The question is whether the revenue stream will last for a long time and will be driven by the emotion of investors rather than by any ability to prove or disprove the thesis that AI is overdone.”
“I believe Nvidia is aware that their numbers will probably be very impressive in the near future.”