Nvidia, a global leader in chipmaking, has made headlines by surpassing Microsoft to become the most valuable public company on Earth. As of June 18, 2024, Nvidia’s market capitalization reached an astounding $3.34 trillion, edging past Microsoft’s $3.33 trillion value. This achievement is a testament to Nvidia’s relentless rally driven by the booming demand for artificial intelligence (AI) and the chips that power it.
Nvidia’s success can be attributed to its dominant position in the AI chip market. The company holds a staggering 80% market share for AI chips used in data centers. This dominance has led to a 427% increase in Nvidia’s data center business revenue from the previous year, reaching $22.6 billion and accounting for about 86% of the chipmaker’s total sales.
The company’s shares have seen a meteoric rise, increasing by more than 170% this year alone. Since the end of 2022, the stock has multiplied by more than ninefold, reflecting Wall Street’s recognition of Nvidia’s technology as the engine behind the explosion in AI.
Founded in 1991, Nvidia initially sold chips for gamers to run 3D titles. Over the years, the company has diversified its portfolio, venturing into cryptocurrency mining chips and cloud gaming subscriptions. However, it’s the company’s role in the AI boom that has truly catapulted its shares over the past two years.
Despite its rapid ascent, Nvidia has yet to be added to the Dow Jones Industrial Average, a stock benchmark of 30 of the most valuable U.S. companies. However, a recent 10-for-1 stock split may increase its chances of being added.
Microsoft, on the other hand, has seen its shares increase by about 20% this year. The software giant has also benefited from the AI boom, after taking a significant stake in OpenAI and integrating the startup’s AI models into its key products, including Office and Windows. Interestingly, Microsoft is one of the biggest buyers of Nvidia’s graphics processing units (GPUs) for its Azure cloud service.
