October 26, 2024

Nvidia claims the title of the world’s most valuable company, surpassing Apple in a historic stock surge.

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In a historic stock surge on Friday, Nvidia briefly overtook Apple as the world’s most valuable company, reaching a peak market value of $3.53 trillion before closing at $3.47 trillion. Apple, which climbed 0.4% during the day, finished with a valuation of $3.52 trillion, according to LSEG data.

Nvidia’s rise is largely attributed to an unrelenting demand for its AI chips, essential to the growing field of artificial intelligence. This achievement marks a significant milestone for Nvidia, a company originally known for its gaming processors. The stock has climbed around 18% in October, fuelled in part by OpenAI’s recent $6.6 billion funding round and continuing AI-driven investments.

The past year has seen Nvidia’s share price skyrocket by nearly 190%, thanks to AI’s continued momentum and Nvidia’s dominating role in the market. Demand for data center chips also got a boost on Friday after Western Digital posted stronger-than-expected quarterly profits, underscoring optimism in the AI sector.

Meanwhile, Apple, historically resilient at the top of the valuation ladder, has grappled with slowing demand for its iPhone, particularly in China, where its third-quarter sales dipped by 0.3% compared to Huawei’s impressive 42% sales increase. With Apple’s quarterly earnings report set for release this Thursday, analysts anticipate a modest 5.55% revenue growth to $94.5 billion. Nvidia, in contrast, is expected to post revenue growth of nearly 82% year-over-year, reaching $32.9 billion.

Nvidia’s success is a boost not only for the tech sector but for the entire U.S. stock market, as the combined influence of Nvidia, Apple, and Microsoft accounts for nearly 20% of the S&P 500’s value. With the stock market at record highs, optimism around AI and anticipated Federal Reserve interest rate cuts continue to drive investor enthusiasm.

As AI adoption broadens across industries, Nvidia’s options are now among the most heavily traded, and its stock remains highly appealing to traders, says data from Trade Alert. However, some experts caution against the potential for AI hype to inflate valuations beyond reasonable limits.

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