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Nvidia surpasses Microsoft in market value: Another technology leader is coming…

NVIDIA  became the most valuable company in the world on Tuesday, as its high-end processors play a key role in the struggle to dominate artificial intelligence technology.

The chipmaker's shares rose 3.5% to $135.58, raising its market cap to $3.335 trillion, just days after overtaking iPhone maker Apple to become the second most valuable company.

Apple stock fell more than 1% to $3.286 billion.

The spectacular rise in Nvidia's market value over the past year has been a symptom of Wall Street turmoil fueled by optimism about emerging AI technologies.

Although Nvidia's rise has sent the S&P 500 and Nasdaq higher, some investors worry that unbridled optimism about AI could fade if there are signs of slowing tech spending.

“This is Nvidia’s market; we’re all just trading,” senior market strategist at Interactive Brokers.

Nvidia has also become by far the most traded company on Wall Street. It has a recent daily turnover of $50 billion, compared to about $10 billion for Apple, Microsoft, and Tesla, according to LSEG data, and currently about 16% of all trade between S&P 500 companies is a chip company.

NVIDIA stock has nearly tripled so far this year, compared to a nearly 19% rise in Microsoft shares, with demand for its top-tier processors outstripping supply.

Technology giants Microsoft, Meta Platforms, and Google owner Alphabet are competing to build their AI computing capabilities and integrate the technology into their products and services.

Considered far superior to competitor offerings, Nvidia’s insatiable appetite for AI processors has made it difficult to deliver, and many investors see Nvidia as the big winner since the rise of AI growth.

“NVIDIA gets a lot of positive attention and has done a lot of things very well, but a small misstep could lead to a major correction in the stock, and investors should be wary,” said senior vice president Oliver Purshe at WealthSpire Advisors in New York.

Tuesday's gains pushed NVIDIA's stock to an all-time high and added more than $110 billion to its market capitalization, equal to the total value of Lockheed Martin.

The company’s market value expanded from $1 billion to $2 billion in just nine months in February, and it took just over three months to hit $3 billion in June

Since its predicted implosion nearly a year ago, the company has consistently exceeded Wall Street's high expectations for earnings and profits, as demand for its imaging equipment far exceeds supply when the rush by companies to deploy AI applications.

Nvidia executives said in May that demand for its Blackwell AI chips could exceed supply “by next year”.

The sharp rise in expectations for NVIDIA's future earnings exceeded its stellar stock returns, leading to a decline in the stock's fair value.

Conclusion: NVIDIA’s leap in market value leaves behind Microsoft, which is a significant milestone in the tech industry. These developments underscore Nvidia’s critical role in optimizing AI and other computing infrastructure.