Nvidia Overtakes Microsoft as Most Valuable Public Company

Nvidia has surpassed Microsoft to become the most valuable public company in the world, with a market cap exceeding $3 trillion. This milestone marks a significant achievement for the chipmaker, known for its graphics chips in the gaming community, as it benefits from the booming generative artificial intelligence sector.

Record-Breaking Market Cap

Nvidia's market cap soared to $3.34 trillion after a 3.6% increase in its share price on Tuesday, surpassing Microsoft's valuation of $3.32 trillion. Nvidia first reached the $3 trillion mark earlier this month, joining the ranks of Microsoft and Apple. The company's shares have increased by over 170% this year, driven by its pivotal role in AI technology.

Dominance in AI Chip Market

Nvidia holds about 80% of the market for AI chips used in data centers, with its processors being essential for companies like OpenAI, Microsoft, Alphabet, Amazon, and Meta. The demand for these chips has surged as these companies expand their AI models and workloads. In the most recent quarter, Nvidia's data center business revenue skyrocketed by 427% from the previous year, reaching $22.6 billion and accounting for 86% of the company's total sales.

Transformation and Growth

Founded in 1991, Nvidia initially focused on hardware for gaming, cryptocurrency mining chips, and cloud gaming subscriptions. However, in the past two years, Wall Street has recognized Nvidia's technology as crucial to the AI explosion, leading to a substantial increase in its stock value. Co-founder and CEO Jensen Huang's net worth has also risen to approximately $117 billion, making him the 11th wealthiest person globally, according to Forbes.

Microsoft's AI Investments

Microsoft has also benefited from the AI boom, with its shares rising about 20% this year. The company made a significant investment in OpenAI and integrated its AI models into key products like Office and Windows. Microsoft is one of the largest buyers of Nvidia's GPUs for its Azure cloud service and recently released AI-optimized laptops called Copilot+.

A New Leader in Market Value

Nvidia's rapid ascent to the top of the market cap rankings has not yet resulted in its inclusion in the Dow Jones Industrial Average. The company's recent 10-for-1 stock split, effective June 7, improves its chances of being added to the price-weighted index, which includes 30 of the most valuable U.S. companies.