In a landmark moment, Nvidia’s (NVDA) stock price surged on June 5th, pushing its market valuation above $3 trillion for the first time. This achievement places Nvidia as the second-most valuable company in the US, surpassing tech giant Apple (AAPL).
The surge comes amid a banner year for Nvidia. The company’s stock price has skyrocketed over 147% in 2024, fueled by booming demand for its graphics processing units (GPUs) used in artificial intelligence (AI) applications. This demand is driven by major tech companies like Microsoft (MSFT) and Google (GOOGL) investing heavily in AI development.
Nvidia Outpaces Apple
On June 5th, Nvidia’s stock closed at a record high of $1,224.40 per share, translating to a market value of $3.01 trillion. This surpasses Apple’s market cap of $3 trillion, a milestone the iPhone maker achieved in July 2023. Notably, the last time Nvidia’s market value exceeded Apple’s was in 2002, before the first iPhone was even released.
Analysts attribute Nvidia’s impressive run to consistent earnings growth exceeding expectations. The company’s strong financial performance, coupled with a bullish outlook, has attracted significant investor interest. Bank of America recently raised its price target on Nvidia stock to $1,500, the highest on Wall Street, citing the company’s promising growth prospects.
“One-for-Ten” Stock Split
Adding to the positive momentum, Nvidia’s previously announced 10-for-1 stock split took effect on June 7th. This move lowers the per-share price, potentially making the stock more accessible to a broader range of investors. Stock splits are often seen as a bullish signal, indicating management’s confidence in the company’s future.
Nvidia’s recent announcement regarding the upcoming launch of its next-generation AI chips, including the Blackwell Ultra and the Rubin platform, further bolstered investor confidence. This innovation is expected to solidify Nvidia’s lead in the AI hardware race.
Apple, while still a tech titan, faces headwinds. The smartphone market, a cornerstone of its success, is experiencing slower growth. Additionally, some analysts suggest Apple may be lagging behind in AI innovation compared to rivals like Nvidia.
While Nvidia’s ascent is impressive, it trails Microsoft, the current leader with a market valuation exceeding $3.1 trillion. However, with the AI market projected for continued explosive growth, Nvidia is well-positioned to challenge for the top spot in the coming years.
Domestic Market Buzz
The surge in Nvidia’s stock price has also impacted the domestic Chinese market. Companies with technical partnerships and supply chain ties to Nvidia have witnessed increased investor attention. These include server suppliers like Foxconn Industrial Internet (FIH) and Inspur Information (SZ Inspur), optical module supplier Zhongji Xuchuan (300785.SZ), and downstream computing power leasing manufacturer Hongbo Shares (688787.SH).
Nvidia’s dominance reflects the increasing importance of AI across various industries. From data centers to self-driving cars, Nvidia’s powerful GPUs are becoming essential tools for processing vast amounts of data and enabling advanced AI functionalities.
This success is further underscored by Nvidia’s impressive financial performance. The company’s first-quarter fiscal report revealed a staggering 262% year-over-year revenue increase, highlighting the strong market demand for its products.
With Nvidia firmly established in the $3 trillion club, the company’s future trajectory remains a subject of intense interest. Whether it can maintain its momentum and dethrone Microsoft as the world’s most valuable company is a question only time will answer.
