Nvidia, known for its graphics chips, has become the most valuable public company in the world. Recently, it surpassed Microsoft, achieving a market cap of over $3.3 trillion. This milestone marks a significant shift in the tech industry, driven by the growing demand for AI computing.

Nvidia Rising

Nvidia’s stock has surged dramatically this year. The company, traditionally focused on gaming hardware, has capitalized on the AI boom. In early June, Nvidia’s market cap reached $3 trillion for the first time, joining the elite club with Microsoft and Apple. The company’s shares have risen more than 170% in 2024 alone.

This growth is primarily due to Nvidia’s dominance in the AI chip market. It holds about 80% of the market share for AI chips used in data centers. Major tech companies like Microsoft, Amazon, and Google rely heavily on Nvidia’s processors to develop and run their AI models. This surge in demand has led to a 427% increase in Nvidia’s data center revenue, now accounting for 86% of its total sales.

The AI Boom and Nvidia Dominance

The explosion of generative AI technologies has been a significant factor in Nvidia’s success. The company’s technology is the backbone for many AI applications, fueling its rapid ascent. As a result, Nvidia’s stock has multiplied ninefold since the end of 2022. This meteoric rise has made its co-founder and CEO, Jensen Huang, one of the wealthiest individuals in the world.

Microsoft, despite its own strong performance and significant investments in AI, has been outpaced by Nvidia. Microsoft has integrated AI models into its key products, such as Office and Windows, and is one of the largest buyers of Nvidia’s graphics processing units (GPUs). However, even with these efforts, Microsoft has seen its market cap fall slightly behind Nvidia’s.

Nvidia’s Stock Performance and Market Cap

Nvidia’s recent stock split has also contributed to its strong market performance. The 10-for-1 stock split, effective from June 7, has made its shares more accessible to investors. Following the split, Nvidia’s stock price surged, further boosting its market cap. The company’s stock is up 174.9% year-to-date and 52.22% over the past three months.

In contrast, Microsoft and Apple have seen more modest gains this year. Microsoft’s stock is up about 20% in 2024, while Apple’s market cap has slightly decreased recently. Nvidia’s rapid ascent has been so swift that it has yet to be added to the Dow Jones Industrial Average, which includes 30 of the most valuable U.S. companies.

Future Prospects for Nvidia and Microsoft

Looking ahead, Nvidia’s position as the leading public company is likely to be reinforced by continued demand for AI solutions. The company’s ongoing innovations and strong market position suggest sustained growth. Nvidia’s ability to provide the essential technology for AI development gives it a significant advantage in the tech industry.

Microsoft, on the other hand, continues to invest heavily in AI and cloud computing. Its partnership with OpenAI and integration of AI into its products show its commitment to staying at the forefront of technological advancements. Despite being surpassed by Nvidia, Microsoft remains a powerful player in the market, with substantial resources and strategic investments.

Conclusion

Nvidia’s rise to the top of the market cap rankings reflects the transformative impact of AI on the tech industry. By surpassing Microsoft, Nvidia has demonstrated its crucial role in the future of computing. As both companies continue to innovate, the competition between Nvidia and Microsoft will shape the tech landscape in the years to come.