Nvidia (NVDA) overtook Microsoft (MSFT) on Tuesday as the world's most valuable company just two weeks after taking second place from Apple (AAPL).
Nvidia's share price rose more than 3.5% to $135 per share, giving the chipmaker a market capitalization of just over $3.33 trillion. Down 0.3% on Tuesday, Microsoft's market capitalization stood at $3.32 trillion.
Nvidia shares are up more than 215% in the last 12 months and more than 3,400% in the last five years. So far this year, Nvidia has gained 173%; Microsoft shares are up just under 19% in 2024.
Nvidia's rise has made it a top weight in the S&P 500 (^GSPC), and the chipmaker has played a pivotal role in the benchmark index hitting all-time highs in 2024.
Until May, the S&P 500 had traded with a near-perfect correlation to Nvidia's price movement, meaning that as Nvidia shares rose, so did the broader index. As of Monday, Nvidia stock gains alone had contributed about a third of the S&P 500's gain so far this year, according to data from Citi's equity research team.
Nvidia completed a 10-for-1 split on June 10.
The company's rise comes amid the generative AI explosion that began when OpenAI unveiled its ChatGPT platform in late 2022. Nvidia's chips, modified graphics cards, and CUDA software platform are designed to train and run programs of AI, giving it a strategic advantage that experts say will take years for rivals AMD and Intel to overcome.
Nvidia is the technology industry's go-to supplier for AI chips and embedded software.
Tech giants including Amazon (AMZN), Google (GOOG), Meta (META), Microsoft, Tesla (TSLA), and others use their hardware to power everything from their cloud-based AI offerings for customers to their own AI models and services.
During a keynote speech at the Computex conference in Taiwan on June 2, CEO Jensen Huang announced that the company will launch a high-power version of its Blackwell chip, called Blackwell Ultra, in 2025, followed by a new chip platform of AI, Rubin. in 2026. The company will introduce an Ultra version of Rubin in 2027.
In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, increases of 461% and 262%, respectively, from the same period a year earlier.
Nvidia's data center revenue in the most recent quarter increased 427% year over year to $22.6 billion, representing 86% of the company's total revenue for the quarter. Nvidia's gaming segment, previously its largest business, posted revenue of $2.6 billion.
But AMD (AMD) and Intel (INTC) are moving forward with their own AI chips with the goal of overtaking Nvidia. AMD recently announced that its MI325X and MI350 will hit the market in 2024 and 2025, respectively, and said its next-generation MI400 AI accelerator platform will land in 2026.
Meanwhile, Intel said its Gaudi 2 and Gaudi 3 AI accelerators will undercut competing chips in price. And with companies spending billions on AI chips, any price savings will certainly be welcome.
Nvidia is also dealing with increasing competition from its own customers, as Amazon, Google and Microsoft look to wean themselves off the company's chips and save on capital expenditures while doing so.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Josh Schafer is a Yahoo Finance reporter. Follow him on X @_joshschafer.
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