Nvidia shares rose about 6% to a record high on Tuesday, putting the AI chipmaker’s market capitalization about $100 billion away from overtaking Apple in a major restructuring of Wall Street’s biggest players.
Last trading at $1,128, NVIDIA’s market cap now stands at $2.8 trillion, compared with $2.9 trillion for Apple, the second most valuable company on Wall Street after Microsoft.
The company’s shares rose 8% during trading to $1,149.39, a new intraday record. Apple shares were down 0.2% in afternoon trading.
Nvidia shares have risen nearly 13% since the company last week predicted second-quarter earnings would beat Wall Street expectations and announced a stock split, exciting investors who continue to bet on the flagship AI company.
“The market is struggling to keep up with the company’s ever-improving growth trajectory and with a forward earnings multiple in the mid-30s it doesn’t feel like bubble territory yet,” said Darren Nathan, head of equity analysis at Hargreaves Lansdown.
Nvidia’s shares recently traded at 36 times forward earnings, compared with 38 times for Advanced Micro Devices and 21 times for Intel, according to data from LSEG.
The company’s shares more than tripled last year and have more than doubled so far this year.
Nvidia, one of the biggest beneficiaries of the AI boom, reported a fivefold increase in revenue from its data center division last week as customers clamored for high-performance chips.
Technology companies including Alphabet Inc., Microsoft Corp. and Amazon.com Inc. are competing for limited supplies of Nvidia’s high-performance chips in a bid to dominate AI computing.
“The business is incredibly strong, there’s a lot of opportunity for continued growth and the AI theme still has a lot of momentum. And when a song is this catchy, investors are going to want to keep humming it all day long,” Dan Coatsworth, investment analyst at AJ Bell, said when asked about the stock’s rise.
Apple has long been considered a must-buy stock on Wall Street, but it has underperformed other big tech companies in recent months and its shares have fallen about 2% this year as it struggles with sluggish iPhone demand and tough competition in China.
Microsoft overtook Apple earlier this year to become the world’s most valuable company, leapfrogging other technology companies on the back of early investments in artificial intelligence across its cloud services.
Microsoft shares fell 0.4% on Tuesday, giving the company a market capitalization of $3.1 trillion.
Apple has also lagged behind rivals such as Microsoft and Google in deploying generative AI, which can generate human-like responses to written prompts, and which are building it into their products.
