Unlock Editor’s Roundup for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Nvidia’s market value soared past $3 trillion to overtake Apple on Wednesday as the world’s second most valuable company, after a year of incredible growth fueled by demand for its artificial intelligence chips.
Shares in the U.S. chip designer rose about 5 percent to push its market capitalization ahead of Apple for the first time — ending the day at $3.01 trillion, according to Bloomberg data, slightly more than $3 trillion in Apple. The iPhone maker lost its spot as the most valuable listed company to Microsoft this year.
Shares of Nvidia, Apple and Microsoft were all slightly lower in early trading on Thursday.
Investors have piled into Nvidia shares as tech groups such as Google, Microsoft and Meta spend billions of dollars on its chips, with no indication that their spending spree will slow in the near future.
Nvidia’s data center chips power AI models that Chief Executive Jensen Huang has claimed will drive a new “industrial revolution”, transforming global business with productivity-enhancing features.
The company delivered another successful earnings report in May, with revenue up 262 percent year-over-year, largely thanks to sales of its current-generation “Hopper” chips. It also announced a 10-for-one stock split, effective June 7.
Nvidia has single-handedly driven more than a third of the gains in Wall Street’s benchmark S&P 500 index this year, according to Bloomberg data, raising fears in some quarters of an unsustainable bubble. The S&P 500 rose 1.2 percent on Wednesday and is up 12.3 percent from last year.
However, Nvidia’s lackluster earnings and repeated forecast upgrades mean the company’s valuation is not at an all-time high when measured as a ratio of its historical or expected earnings.
On Wednesday it was valued at 42 times expected earnings over the next 12 months. That’s up from 23 times forward earnings at the start of the year and well above Apple’s 29 times – although that’s below the peak it hit during the height of the first wave of AI euphoria last year.
“The advantage they have is that they are one of the very few companies that can prove AI revenue,” said Stuart Kaiser, head of U.S. equity trading strategy at Citigroup. “As high as possible [the stock] increases and the further you get into this revenue cycle the more the risks increase, but so far it looks pretty clean.”
Despite moves by rivals such as AMD and Intel to capture some of Nvidia’s market share, it remains the undisputed leader in the global technology race to provide the most advanced hardware for increasingly demanding AI workloads, such as and software tools to build AI applications.
Huang has promised a “one-year pace” of new chips and unveiled Nvidia’s Blackwell products in March. Huang said they would generate “a lot” of revenue this year, faster than many analysts had predicted.
And in a surprise move at Taiwan’s Computex conference over the weekend, Huang also teased the next generation of “Rubin” processors, which will start shipping in 2026.
Apple is holding its annual Worldwide Developers Conference on June 10, where CEO Tim Cook is expected to lay out the company’s own plan for integrating generative AI features into its products.
Apple has so far been left out of the market buzz around generative AI that has boosted the shares of its rivals. Sales of its iPhones are also down year-over-year, partly due to resurgent competition in China.
But Cook has said it is “bullish” on its AI prospects, and Apple shares have also recovered from a slump earlier in the year, with the company announcing a larger-than-expected $110 billion stock buyback in May.
