SAN FRANCISCO — Nvidia, the computer chip maker at the center of the artificial intelligence boom, continued its impressive share price rise on Tuesday, surpassing Microsoft and Apple to become the world's most valuable publicly traded company.
Nvidia shares rose more than 3% on Tuesday, giving the company a market capitalization of $3.34 trillion. Apple and Microsoft, longtime competitors for the title of world's most valuable company, had slightly lower market capitalizations of about $3.29 trillion and $3.31 trillion, respectively, at the close of trading.
Nvidia's computer chips and software are essential for training the AI algorithms behind image generators and chatbots like OpenAI's ChatGPT. As the tech and business worlds jump on the AI boom, demand for chips has soared, helping Nvidia's revenue grow to $26 billion in the first quarter of this year, from just $7.2 billion a year ago.
The AI boom has reshaped the world's largest companies over the past two years, with Microsoft overtaking Apple as the world's most valuable company in January as investors poured money into the hot technology.
Gene Munster, managing partner at Deepwater Asset Management, said Nvidia, which was already a large company, “has been one of the most spectacular growth stories” in the technology sector.
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“I don't think this is the end,” he said. “If we believe that AI is as transformative as some people believe it is, then this trend will continue.”
Nvidia's rise to become the world's most valuable company shows how strongly investors believe executives at major tech companies are telling them that AI will reinvent every aspect of modern life. Because AI technologies require more computing power than other kinds of software, business leaders are busy building new data centers and equipping them with chips from Nvidia and other companies to handle the new AI tasks.
Professional investment funds and individual retail investors are also pouring money into Nvidia shares, causing the stock price to rise faster than the company's revenue growth. Nvidia's shares have risen about 700% since OpenAI launched ChatGPT in late November 2022, sparking a wave of interest in AI.
Nvidia controls about 70% of the AI chip market, making it an industry kingmaker and drawing new scrutiny from regulators.
Nvidia declined to comment Tuesday.
Before the AI boom, Nvidia was best known for making computer chips used in video game consoles and computers, but the special properties of these “graphics processing units” that make them useful for gaming also made them well suited to handling the massive calculations needed to train AI algorithms.
In the mid-2010s, researchers at the Artificial Intelligence Laboratory began using Nvidia's GPUs as they refined increasingly powerful AI. The company took notice and began improving the software that programs its chips to make them better suited for AI tasks. By the time the AI boom hit, much of the industry had become accustomed to using Nvidia's chips and software. Other chip companies, such as AMD and Intel, are scrambling to catch up, but industry analysts and AI researchers say Nvidia will continue to benefit from this lead for years to come.
Shira Ovide contributed to this report.
