Nvidia Dethrones Apple as World’s Top Company, Fueled by AI Chip Demand and Stock Surge

Nvidia has claimed the title of the world’s most valuable company, surpassing Apple with a $3.53 trillion market value. The AI chipmaker’s stock surged 18% in October, driven by strong demand for its supercomputing technology and optimism around AI expansion.

Nvidia Overtakes Apple in Market Value Amid Soaring AI Chip Demand

Friday saw a record-breaking stock rise for Nvidia as the world's most valuable corporation, surpassing Apple. This was driven by an insatiable demand for Nvidia's latest supercomputing AI chips.

According to LSEG data (via Reuters), Nvidia's stock market value temporarily surpassed $3.53 trillion, while Apple's was $3.52 trillion.

Prior to being surpassed by Microsoft and Apple in June, Nvidia momentarily became the most valuable corporation in the world. The three tech companies' market caps have been virtually tied over the past few months. At that time, Microsoft was worth $3.20 trillion.

With a series of advances following OpenAI's announcement of a $6.6 billion fundraising round, Nvidia's stock has increased around 18% so far in October. OpenAI is the firm behind ChatGPT. To train so-called foundation models like OpenAI's GPT-4, Nvidia supplies the CPUs.

"More companies are now embracing artificial intelligence in their everyday tasks and demand remains strong for Nvidia chips," stated Russ Mould, investment director at AJ Bell.

Record High Share Price Follows Strong TSMC Earnings

Tuesday's record-high share price for Nvidia continued last week's climb after TSMC, the biggest contract chipmaker in the world, reported a 54% increase in quarterly earnings, exceeding expectations, due to skyrocketing demand for AI chips.

In November, when Nvidia releases its third-quarter earnings, the pressure will be on. Data collected by LSEG shows that the average expert projection is $32.90 billion for the third quarter, while Nvidia predicted $32.5 billion, give or take 2 percent, for the same period in 2017.

Next-Gen Blackwell Chips: Strong Demand Despite Delays

While Joseph Moore, an analyst at Morgan Stanley, is still "very bullish" on the company's long-term prospects, he did say that the current upswing "raises the bar for earnings somewhat" in a note dated October 10th.

Moore mentioned that the next-generation Blackwell chips look to be "quite strong" and are booked out for 12 months after meeting with Nvidia's CEO Jensen Huang. In August, Nvidia acknowledged rumors that the manufacturing of Blackwell chips would be delayed until the fourth quarter, which put pressure on the stock.

With a combined weight of almost 20% in the S&P 500 index, the shares of Microsoft, Nvidia, and Apple have a disproportionate impact on the highly valued technology industry and the whole US stock market.

AI Optimism and Fed Rate Cuts Push Markets to New Highs

Last week, the benchmark S&P 500 reached a new all-time high due to a confluence of factors including optimism about AI's potential, predictions that the US Federal Reserve will significantly lower interest rates, and, most recently, a strong start to earnings season.

Options analytics firm Trade Alert reports that Nvidia's options are among the most actively traded on any given day in the past several months, thanks in large part to the stock's meteoric rise in value.

Due to the company's succession of overly optimistic predictions and the subsequent boom in generative AI, the stock has increased by almost 190% so far this year, CNA shares.

Long-Term Sustainability of Nvidia's Growth Remains in Question

"The question is whether the revenue stream will last for a long time and will be driven by the emotion of investors rather than by any ability to prove or disprove the thesis that AI is overdone," said Rick Meckler of Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"I think Nvidia knows that near term, their numbers are likely to be quite remarkable."