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Nvidia Overtakes Microsoft as World's Most Valuable Company
In a dramatic shift within the tech industry, Nvidia has surpassed Microsoft to become the most valuable company globally. On Tuesday, Nvidia's stock price surged more than 3.5%, reaching over $135 per share and resulting in a market capitalization just above $3.33 trillion. Conversely, Microsoft's market cap slid 0.3%, closing at $3.32 trillion.
Over the past year, Nvidia's shares have skyrocketed more than 215% and have achieved a staggering increase of over 3,400% in the past five years. Year to date, Nvidia has gained 173%, while Microsoft’s stock has increased by less than 19% in 2024. This remarkable growth has made Nvidia a key component of the S&P 500 index, driving the index toward record highs this year. Prior to May, Nvidia’s stock price trajectory significantly influenced the broader index. According to Citi’s equity research team, Nvidia’s stock alone contributed roughly one-third of the S&P 500’s year-to-date rise as of Monday.
AI Boom and Strategic Advantage
Nvidia's unprecedented rise aligns closely with the explosion in generative AI technology that began with the introduction of OpenAI’s ChatGPT in late 2022. Nvidia’s hardware, including modified graphics cards and its CUDA software platform, is integral to both training and operating AI programs. This has positioned Nvidia ahead of competitors AMD and Intel, which experts believe will take years to rival Nvidia’s capabilities. Major tech companies like Amazon, Google, Meta, Microsoft, and Tesla depend on Nvidia’s hardware to support their AI models and cloud-based AI services.
Upcoming Product Announcements
During a keynote at the Computex conference in Taiwan on June 2, Nvidia announced it will release a high-powered version of its Blackwell chip, named Blackwell Ultra, in 2025. This will be followed by a new AI chip platform, Rubin, in 2026, with an Ultra version of Rubin slated for 2027.
Financial Performance
In the latest quarterly report, Nvidia posted adjusted earnings per share of $6.12 on revenue of $26 billion. These figures represent jumps of 461% and 262%, respectively, from the same period a year prior. Notably, Nvidia’s Data Center revenue surged 427% year over year, reaching $22.6 billion and accounting for 86% of the company's total quarterly revenue. Meanwhile, revenue from Nvidia’s gaming segment, previously its key business area, stood at $2.6 billion.
Rising Competition
Despite Nvidia’s dominance, competitors AMD and Intel are making strides with their own AI chips. AMD has announced the release of its MI325X and MI350 chips for 2024 and 2025, respectively, and aims to launch its MI400 AI accelerator platform in 2026. Intel, on the other hand, is introducing its Gaudi 2 and Gaudi 3 AI accelerators, which promise competitive pricing—an attractive prospect for companies investing significantly in AI technology.
Nvidia is also facing growing competition from its customers, as tech giants like Amazon, Google, and Microsoft attempt to reduce their reliance on Nvidia’s chips to cut capital expenditures.
