Nvidia's shares surged approximately 6% on Tuesday, reaching an all-time high and positioning the AI chipmaker within $100 billion of surpassing Apple's market value in a significant shift among Wall Street's leading companies.
Nvidia's stock closed at $1,128, boosting its market capitalization to $2.8 trillion, just shy of Apple's $2.9 trillion valuation. During the session, Nvidia's shares peaked at an intra-day record of $1,149.39, while Apple's stock dipped 0.2% in afternoon trading.
The recent rally in Nvidia's shares, up nearly 13% since forecasting second-quarter revenue above expectations and announcing a stock split, underscores investor confidence in the company's role as a leader in the AI industry. Derren Nathan, head of equity analysis at Hargreaves Lansdown, remarked, "The market has been struggling to keep up with the company's ever-improving growth trajectory. At a mid-thirties forward earnings multiple, this still doesn't feel like bubble territory."
Currently, Nvidia trades at 36 times its forward profit estimates, compared to 38 for Advanced Micro Devices and 21 for Intel, according to LSEG data. Nvidia's stock has more than doubled this year after tripling in value last year, driven by a five-fold increase in revenue from its data center segment as demand for its high-performance AI chips soared.
Tech giants like Alphabet, Microsoft, and Amazon are fiercely competing for Nvidia's limited supply of advanced chips to secure a foothold in AI computing. Dan Coatsworth, investment analyst at AJ Bell, commented on the stock's rally, stating, "Business is doing incredibly well, there are so many opportunities to keep growing, and the AI theme still has legs. When the song is that catchy, investors want to keep humming it all day long."
In contrast, Apple has underperformed other major tech stocks recently, with a roughly 2% decline this year due to sluggish iPhone demand and increased competition in China. Earlier this year, Microsoft surpassed Apple as the world's most valuable company, leveraging gains from its early AI investments in cloud services. As of Tuesday, Microsoft's shares were down 0.4%, giving it a market value of $3.1 trillion.
The rapid ascent of Nvidia highlights the growing importance of AI in the tech industry, as companies and investors alike bet heavily on its future potential.
