Noel Randewich
(Reuters) – NVIDIA shares surged to record highs on Wednesday as the artificial intelligence chip maker’s valuation topped the $3 trillion mark and overtook Apple (NASDAQ:) to become the world’s second most valuable company.
Nvidia (NASDAQ:) is preparing to split its shares by a ten-to-one ratio starting June 7, a move that could make it more attractive to individual investors.
Nvidia’s rise in market value relative to Apple marks a shift in Silicon Valley, where the company co-founded by Steve Jobs has dominated since the iPhone launched in 2007.
Nvidia shares rose 5.2% to end the day at $1,224.40, valuing the company at $3.012 trillion. Apple’s market capitalization last stood at $3.003 trillion after its shares rose 0.8%.
Microsoft (NASDAQ:), based in Redmond, Washington, remained the world’s most valuable company at $3.15 trillion after its shares rose 1.9%.
“Nvidia is now making money on AI, and companies like Apple and Meta are spending money on AI,” said Jake Dollarhide, CEO of Longbow Asset Management.
“The conclusion that Nvidia will overtake Microsoft may be a foregone conclusion. There is a lot of retail money that is piling up in what they consider to be a straight surge.”
Nvidia shares are up 147% in 2024, with demand for its top-end processors far outpacing supply as Microsoft, Meta Platforms (NASDAQ:) and Google-owner Alphabet (NASDAQ:) race to build their artificial intelligence. computing capabilities and dominate new technologies.
It’s up nearly 30% just since May 22, when Nvidia released its latest stellar earnings forecast.
On Wednesday, Nvidia added nearly $150 million to its market capitalization, more than the entire value of AT&T (NYSE:).
Optimism about artificial intelligence lifted chip stocks significantly on Wednesday, with the PHLX chip index rising 4.5%. Shares of Super Micro Computer (NASDAQ:), which sells servers optimized for artificial intelligence and built on Nvidia chips, rose 4%.
Nvidia CEO Jensen Huang was the subject of constant coverage on Taiwanese television this week and was mobbed by visitors as he attended the Computex technology trade show in Taipei, where he was born before moving to the United States.
While Nvidia is riding a wave of artificial intelligence enthusiasm on Wall Street, Apple is struggling with weak iPhone demand and fierce competition in China, the world’s largest smartphone market.
Some investors also believe Apple is lagging behind other tech heavyweights as they rush to build artificial intelligence capabilities into their products and services.
Analyst forecasts for Nvidia’s future earnings have outpaced its stock’s stellar run. Nvidia is trading at 39 times expected earnings, making it cheaper than a year ago, when it was trading at more than 70 times expected earnings, according to LSEG.