Image source, Getty Images
- author, Mitchell Labiak
- role, Business reporter
Nvidia’s shares rose to an all-time high on Tuesday, making it the world’s most valuable company.
The company’s shares rose 3.5 percent to close at nearly $136, giving it a larger market capitalization than Microsoft, which overtook Apple earlier this month.
Nvidia makes computer chips needed for artificial intelligence (AI) software, and demand for its products has boosted its revenue and profits in recent years.
Many investors believe the company’s earnings will grow further, driving the stock price higher, but some are questioning the lofty valuation.
Tuesday’s share price rise means the company’s market capitalisation is now $3.34 trillion (£2.63 trillion) and its share price has almost doubled since the beginning of this year.
Eight years ago, this stock was worth less than 1% of its current price.
Competition among AI developers is fierce: Microsoft, Google parent Alphabet, Meta and Apple are just some of the tech giants vying to create world-beating products.
This competition benefits Nvidia, which dominates most of the AI chip market.
That has investors betting the company’s value will continue to rise. In recent years, Nvidia’s sales and profit figures have beaten many analysts’ expectations.
After its latest financial statements were released in May, Quilter Cheviot technology analyst Ben Ballinger said the company had “yet cleared a very high hurdle”.
“Demand is also showing no signs of slowing,” he added.
But a minority are more cautious.
In February, Barclays credit analyst Sandeep Gupta argued that Nvidia’s large market share will be hard to maintain given the rise of rivals, and questioned how Nvidia’s customers would monetize its AI software.