Nvidia has claimed the title of the world’s most valuable company, surpassing Microsoft, as its chips continue to be essential in the race for dominance in the artificial intelligence market. The chipmaker’s shares rose by 3.2% to $135.21, leading to a market capitalization of $3.326 trillion. This achievement came shortly after Nvidia overtook Apple to become the second most valuable company. Throughout the year, Nvidia’s stock has increased by approximately 173%, while Microsoft shares have only risen by about 19%.
The significant buying interest in Nvidia from both hedge funds and retail investors is driving up its stock price. Wasif Latif, President and Chief Investment Officer at Sarmaya Partners in Princeton, New Jersey, highlighted this trend and believes it will continue given the available tools in thematic funds and leveraged funds. The stock’s performance is closely tied to its earnings growth, and historically, high-growth stocks have performed well as long as this trajectory remains intact. However, sustained perpetual growth is not feasible, and a slowdown in earnings growth in the future could impact the stock’s value.
The market anticipates that Nvidia will continue to grow potentially becoming the largest company globally as it continues to lead the way in AI technology development and innovation. Despite challenges such as supply chain issues and increasing competition from other chipmakers like AMD, Nvidia remains well positioned for continued success due to its strong position in AI markets and growing demand from emerging technologies like autonomous vehicles and smart cities.
