Shares of Nvidia reached a record high on Monday, positioning the Santa Clara-based chipmaker close to surpassing Apple as the world’s most valuable company.
Nvidia’s stock rose by 2.4%, closing at $138.07, as investors continued to back strong demand for its artificial intelligence (AI) processors.
The graphics processing units (GPUs) maker briefly held the title of the world’s most valuable company in June, before being overtaken by Microsoft. For several months, the market valuations of Nvidia, Microsoft, and Apple have remained competitive, with their values closely aligned. Nvidia’s recent gains brought its market value to $3.39 trillion, just trailing Apple’s $3.52 trillion, while Microsoft’s stands at $3.12 trillion, reported Reuters.
Nvidia’s competitive advantage in AI
Nvidia has been a significant beneficiary of the ongoing competition among leading technology companies such as Alphabet, Microsoft, and Amazon to establish dominance in the growing AI technology sector. Analysts at TD Cowen noted that the major players in AI face an environment where each is driven to invest due to the risks of being left behind.
TD Cowen, in a report on Sunday, reiterated its price target of $165 for Nvidia, highlighting the company’s strong demand for its AI processors and naming it their “Top Pick.” The firm also addressed Nvidia’s recent confirmation in August regarding delays in ramping up production of its upcoming Blackwell chips until the fourth quarter. Nvidia indicated that existing processors were still in high demand.
The rise in Nvidia’s shares coincided with gains for Apple and Microsoft, which saw increases of 2% and 0.7% respectively, contributing to the S&P 500 index (.SPX) reaching a record high close, up 0.8% on Monday. Together, Nvidia, Apple, and Microsoft account for around 20% of the S&P 500’s weighting, substantially impacting the index’s performance.
Meanwhile, Taiwan Semiconductor Manufacturing Co (TSMC), which manufactures Nvidia’s processors, is set to release its earnings on Thursday, with analysts predicting a 40% increase in quarterly profit, driven by growing demand. Spending on AI data centres is expected to boost Nvidia’s annual revenue to nearly $126bn, according to LSEG data.
Although Nvidia’s strong performance has lifted the S&P 500 to new highs, concerns remain among investors about the possibility that optimism around AI could fade if spending on the technology shows signs of slowing.
In contrast to the high valuation achieved in recent days, Nvidia faced a significant setback in September as its stock decline erased $279bn in market value amid concerns about AI investments. The sharp drop was triggered by a disappointing quarterly outlook that missed investor expectations, raising worries about slower-than-expected returns on AI investments.
At that time, Nvidia experienced a historic single-day loss as shares fell 9.5%, leading to a $279bn reduction in market capitalisation, marking the largest one-day decline for any US company and surpassing Meta Platforms’ $232bn loss in February 2022.
For Q2 FY25, Nvidia reported a GAAP net income of $16.6bn, a 168% year-on-year increase, with total revenue reaching $30bn, up 122% from the previous year. For Q3 FY25, Nvidia forecasted revenue of approximately $32.5bn, with a potential variance of plus or minus 2%.
Read more: Just how high can Nvidia fly?
