Nvidia surged to become the world’s most valuable company on Tuesday, reaching a new all-time high in its share price.
Closing at nearly $136, up 3.5% for the day, Nvidia’s market capitalization now surpasses that of Microsoft. This milestone follows its earlier overtaking of Apple’s valuation earlier this month.
Specialising in computer chips crucial for artificial intelligence (AI) software, Nvidia has enjoyed robust sales and profits driven by soaring demand for its products in recent years.
Investors are optimistic about its future earnings potential, propelling its share price to new heights, although some have raised concerns about its lofty valuation.
With Tuesday’s rally, Nvidia is now valued at $3.34 trillion (£2.63 trillion), nearly doubling its value since the beginning of the year.
Just eight years ago, the company’s stock was trading at less than 1% of its current price.
In the competitive landscape of AI development, Nvidia stands out as a dominant player, commanding the majority share of the AI chip market.
This competitive advantage positions Nvidia favourably in the eyes of investors, who anticipate continued growth in its market value based on strong sales and profit performance that consistently surpasses analyst expectations.
In May, after its latest set of financial results were published, Quilter Cheviot technology analyst Ben Barringer said the company had “once again cleared a very high hurdle.”
“Demand is showing no signs of switching off either,” he added.
However, not everyone shares the same optimism.
Back in February, Barclays credit analyst Sandeep Gupta expressed caution, suggesting that Nvidia might struggle to sustain its substantial market share amidst growing competition. He also raised concerns about the profitability of Nvidia’s customers in monetizing AI software.