San Francisco-based technology company Nvidia has achieved a significant milestone by surpassing Microsoft and Apple to become the world’s most valuable public company, according to data from S&P Global. The company’s rise to the top has been fueled by the exponential growth in generative artificial intelligence and the soaring demand for its graphics processing units (GPUs), which are instrumental in building AI systems.
Nvidia’s remarkable ascent is one of the fastest in market history. Just two years ago, the company’s market valuation stood at over $400 million. However, within a span of a year, it has skyrocketed from $1 trillion to over $3 trillion. On Tuesday, Nvidia’s stock rose by 3.6%, pushing its market value to an impressive $3.34 trillion, surpassing both Microsoft and Apple.
Nvidia’s CEO, Jensen Huang, made a prescient bet on the importance of GPUs in AI development years before other major chip companies. This strategic move has paid off handsomely, as the company now controls over 80% of the market for AI system chips. Nvidia’s prominent customers are fiercely competing for chip orders to power their massive data centers and are even developing their own AI chips to reduce dependency on a single supplier.
The company’s rapid rise has turned Huang into a celebrity in the tech world. At a recent computer conference in Taiwan, he was surrounded by attendees seeking his autograph, with one woman even requesting him to sign her chest.
Nvidia’s trajectory is reminiscent of dot-com era giants like Cisco and Juniper Networks, which played a crucial role in building the infrastructure for internet communication networks. Cisco’s shares experienced a thousandfold increase between its initial public offering in 1990 and 2000 when it briefly became the world’s most valuable company.
However, Nvidia’s investors are banking more on its potential rather than its current profits. While Microsoft and Apple generate over $85 billion in annual profits, Nvidia’s profits stand at $42.6 billion. Some analysts express concerns about the sustainability of Nvidia’s growth, particularly if the expected returns on AI fail to materialize.