July 19, 2024

Nvidia CEO Jensen Huang attends an event at COMPUTEX forum in Taipei, Taiwan June 4, 2024. 

Ann Wang | Reuters

Nvidia, long known in the niche gaming community for its graphics chips, is now the most valuable public company in the world.

Shares of the chipmaker climbed 3.6% on Tuesday, lifting the company’s market cap to $3.34 trillion, surpassing Microsoft, which is now valued at $3.32 trillion. Earlier this month, Nvidia hit $3 trillion for the first time, and passed Apple.

Nvidia shares are up more than 170% so far this year, and went a leg higher after the company reported first-quarter earnings in May. The stock has multiplied by more than ninefold since the end of 2022, a rise that’s coincided with the emergence of generative artificial intelligence.

Apple shares fell 1.1% on Tuesday, giving the iPhone maker a $3.29 trillion market value.

Nvidia has about 80% of the market for AI chips used in data centers, a business that’s ballooned as OpenAI, Microsoft, Alphabet, Amazon, Meta and others have raced to snap up the processors needed to build AI models and run increasingly large workloads.

For the most recent quarter, revenue in Nvidia’s data center business rose 427% from a year earlier to $22.6 billion, accounting for about 86% of the chipmaker’s total sales.

Founded in 1991, Nvidia spent its first few decades primarily as a hardware company that sold chips for gamers to run 3D titles. It’s also dabbled in cryptocurrency mining chips and cloud gaming subscriptions.

But over the past two years, Nvidia shares have skyrocketed as Wall Street came to recognize the company’s technology as the engine behind an explosion in AI that shows no signs of slowing. The rally has lifted co-founder and CEO Jensen Huang’s net worth to about $117 billion, making him the 11th wealthiest person in the world, according to Forbes.

Microsoft shares are up about 20% so far this year. The software giant has also been a major beneficiary of the AI boom, after it took a significant stake in OpenAI and integrated the startup’s AI models into its most important products, including Office and Windows. Microsoft is one of the biggest buyers of Nvidia’s graphics processing units (GPUs) for its Azure cloud service. The company just released a new generation of laptops that are designed to run its AI models, called Copilot+.

Nvidia is a newcomer to the title of most valuable U.S. company. For the past few years, Apple and Microsoft have been trading the title.

Nvidia’s ascent has been so rapid that the company has yet to be added to the Dow Jones Industrial Average, the stock benchmark of 30 of the most valuable U.S. companies. Alongside its earnings release last month, Nvidia announced a 10-for-1 stock split, which went into effect on June 7.

The split gives Nvidia a better shot at being added to the Dow, which is a price-weighted index, meaning that companies with higher stock prices — rather than market caps — have outsized influence on the benchmark.

Correction: Nvidia’s 10-for-1 stock split was effective this month. An earlier version noted a different calendar date.

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