NVIDIA's shares closed at a record high on Wednesday, surpassing $3 trillion in market capitalization and overtaking Apple as the second-most valuable U.S. company. The chipmaker's success is fueled by the booming demand for its AI chips, with its data center revenue growing by a staggering 427% in the latest quarter. NVIDIA's CEO, Jensen Huang, has positioned the company at the forefront of the AI revolution, and investors are taking note.
The chipmaker’s market value reached $3.019 trillion after shares surged more than 5% on Wednesday, edging out Apple's market cap of $2.99 trillion. Microsoft still holds the top spot with a market cap of $3.15 trillion.
NVIDIA's dominance in the AI chip market is evident, with an estimated 80% market share in data centers. The company's data center business, which includes its GPU sales, has experienced explosive growth, with revenue surging to $22.6 billion in the most recent quarter, accounting for 86% of the company's total sales.
Investors are becoming increasingly confident in NVIDIA's ability to sustain its tremendous growth, driven by the billions of dollars in spending from major cloud vendors. The company's stock has skyrocketed more than 147% this year, adding approximately $1.8 trillion to its market value.
In contrast, Apple's growth has stalled in recent months, with overall sales dropping 4% and iPhone sales falling 10% in the most recent quarter. The iPhone maker faces challenges related to demand in China, manufacturing issues, and mixed reactions to its new virtual reality headset, Vision Pro.
NVIDIA's journey to becoming a trillion-dollar company has been marked by a strategic shift from its origins in gaming hardware to its current focus on AI chips and cloud services. The company's shares have soared more than 3,290% over the past five years, reflecting the market's enthusiasm for its AI-driven growth potential.
While NVIDIA is currently dominating the AI chip market, it faces competition from rivals AMD and Intel, who are developing their own AI chips. Additionally, NVIDIA must navigate the challenge of customers like Amazon, Google, and Microsoft seeking to reduce their dependence on its chips.
Chris McKay
Despite these challenges, NVIDIA remains the undisputed leader in the AI chip market, and its position is expected to remain secure in the near future. The company's recent announcement of its forthcoming Blackwell Ultra chip in 2025, followed by the Rubin platform in 2026, further solidifies its commitment to staying at the cutting edge of AI technology.