Nvidia briefly overtakes Apple as the world’s most valuable company

Nvidia briefly dethroned Apple as the world’s most valuable company on Friday, after a record rise in shares powered by voracious demand for its new supercomputer AI chips.

Nvidia’s stock market value briefly hit $3.53 trillion in intraday trading, while Apple’s was $3.52 trillion, according to data from LSEG. Nvidia ended the session with a market cap of $3.47 trillion, while Apple held steady.

In June, Nvidia briefly became the world’s most valuable company, before being overtaken by Microsoft and Apple. The tech trio’s market capitalizations have been flat for months. Microsoft’s market value was $3.20 trillion.

Shares of Nvidia are up about 18% so far in October, with a string of gains coming after OpenAI, the company behind ChatGPT, announced a $6.6 billion funding round. Nvidia provides chips used to train so-called foundational models such as OpenAI’s GPT-4.

“More companies are now embracing artificial intelligence in their everyday tasks and demand remains strong for Nvidia chips,” said Russ Mould, investment director at AJ Bell.

“It’s certainly in a sweet spot, and as long as we avoid a major economic downturn in the United States, there’s a sense that companies will continue to invest heavily in AI capabilities, creating a healthy headwind for Nvidia. “

Shares of Nvidia hit a record high on Tuesday, building on a rally from last week when TSMC, the world’s largest contract chip maker, posted a forecast 54% jump in quarterly profit driven by growth in demand for chips used in AI.

The next big test will be when Nvidia reports its third-quarter results in November. Nvidia in August forecast third-quarter revenue of $32.5 billion, plus or minus 2%, compared with the current average analyst expectation of $32.90 billion, according to data compiled by LSEG.

Morgan Stanley analyst Joseph Moore said in an Oct. 10 note that he remains “very bullish” on the company long-term, but the recent growth “raises the earnings bar somewhat.”

After a meeting with Nvidia CEO Jensen Huang, Moore noted that production growth of its next-generation Blackwell chips appeared to be “pretty strong” and are booked for 12 months. Shares came under pressure in August after Nvidia confirmed reports that production of Blackwell chips was delayed until the fourth quarter.

Shares of Nvidia, Apple and Microsoft have a big influence on the value-rich tech sector as well as the broader US stock market, with the trio accounting for about a fifth of the S&P 500 index’s weight.

Frenzy over AI prospects, expectations that the Federal Reserve will cut interest rates sharply and, more recently, an upbeat start to the earnings season pushed the benchmark S&P 500 to an all-time high last week.

Nvidia’s massive earnings have helped boost the stock’s appeal to options traders, and the company’s options are among the most traded on any given day in recent months, according to data from options analytics provider Trade Alert.

Shares are up nearly 190% so far this year after a boom in generative AI prompted the company to issue a series of breakout predictions.

“The question is whether the revenue stream will last for a long time and be driven by investor emotion rather than any ability to prove or disprove the thesis that AI is overrated,” said Rick Meckler, partner at Cherry Lane Investments. a family investment office in New Vernon, NJ.

“I think Nvidia knows that roughly, their number is likely to be quite extraordinary.”