Nvidia's (NVDA) market value has surpassed Microsoft (MSFT) and Apple (AAPL) after months of explosive growth driven by chip demand and investors' enthusiasm for artificial intelligence.

The company's shares rose 3.5% to $135.58 on Tuesday, giving it a market value of $3.335 trillion, surpassing Microsoft and Apple to become the world's most valuable public company.

Nvidia is the 12th company to lead the S&P 500 (SPX) since its founding in 1926. For more than a decade, Apple and Microsoft have been competing for the position of the most valuable company in the United States, and even the world. The last time another American company had a market value greater than these two was in 2011, when ExxonMobil (XOM) was the most valuable company in the United States.

Nvidia has been a major beneficiary of surging demand for chips that can train and run powerful generative AI models like OpenAI’s ChatGPT. In less than two years, it has transformed from a $300 billion company into one of the most powerful tech companies in the world, with other Silicon Valley giants lining up to buy its latest gadgets.

Nvidia has driven about a third of the benchmark S&P 500’s 14% gain so far this year, a strength that has surprised even bullish observers.

“Nvidia is a terrific company and there are a lot of drivers for the stock ... but a 40% gain in a month is not normal,” said Ted Mortonson, technology strategist at Baird.

The Silicon Valley-based company, which was founded 31 years ago and makes PC graphics cards for video gamers, has seen consecutive quarters of sharp revenue growth over the past year, with year-over-year growth of 265% and 262% in February and May, respectively. Its stock price has risen about 170% since the beginning of the year.

Nvidia CEO Jensen Huang declared that the company is at the center of a new "industrial revolution," unleashing the power of generative artificial intelligence to transform all sectors of the global economy with intelligent computing.

Google (GOOGL), Microsoft and Amazon (AMZN) have all bought its "Hopper" series of graphics processing units (GPUs) for use in their cloud services. Nvidia's software ecosystem, Cuda, provides tools for developers who use its chips, solidifying its dominance.

At the same time, the company is launching a more powerful new generation of Blackwell chips. It is understood that Nvidia’s first Blackwell chip is called GB200, which is advertised as the "world's most powerful chip" at present.

Huang has pledged to release new chips once a year, and Nvidia's dominance remains unshakable even as rivals such as AMD and Intel have introduced their own AI chips.

"Someone is always going to be No. 1, and Nvidia's stock didn't just go up on its own, it went up on its financials," said Stacy Rasgon, a chip analyst at Bernstein. "In terms of the actual factors driving it, I've never seen anything like it. It's amazing."

The race to exploit the opportunities presented by generative AI has swept across the tech industry, and at its annual developer conference last week, Apple joined the fray, announcing that its own suite of generative models would be built into its new operating systems and signing a major partnership with OpenAI.

However, Nvidia's growing influence on broader stock indexes has raised concerns about the long-term sustainability of the market's rebound, but few analysts or investors predict a reversal in the short term. Among the 72 Nvidia analysts tracked by foreign media, only one rated the stock as "sell." Hans Olsen, chief investment officer of Fiduciary Trust, a wealth management company with $23 billion in assets, said:

“This top-heavy nature of the market is really concerning...We’re at a level of concentration that we haven’t seen since 1999, and that’s problematic. But if you think back to the dot-com bubble from 1997 to March 2000, we probably have a long way to go.”

The article is forwarded from: Jinshi Data