Nvidia Overtakes Apple to Become World’s Most Valuable Company Thanks to AI

Nvidia’s Historic Leap: The New King of Wall Street

On 5 November 2024, Nvidia made history by overtaking Apple to become the most valuable company on Wall Street, with a market capitalisation of US$3.43 trillion.

This achievement marks the growing dominance of artificial intelligence (AI) and highlights Nvidia's pivotal role in shaping the future of technology.

The company’s stock surged by 2.9%, bringing its share price to US$139.93, outpacing Apple’s US$3.38 trillion market cap.

This rise in Nvidia’s value reflects the broader AI boom, which continues to drive Wall Street’s attention.

AI’s Impact on Market Leadership

Nvidia’s climb to the top spot on Wall Street is a clear signal of the immense influence AI is having on the financial world.

The chipmaker, which produces critical components for AI infrastructure, has seen its shares soar by over 850% since the end of 2022.

Analysts like Dr Fall Ainina, Director of Research at James Investment Research, believe that Nvidia’s rise isn’t just about inflation or job numbers.

Dr Ainina remarked,

"It has felt like people basically care about inflation numbers, job numbers, and Nvidia numbers. Nvidia overtaking Apple in market cap not only conveys that it is the biggest beneficiary of the AI infrastructure cycle, but it suggests people expect the AI boom will continue."

How Does Nvidia Fit Into the Bigger Picture of AI?

Nvidia isn’t the only tech giant benefiting from the AI revolution.

Apple, Microsoft, Amazon, Alphabet, and Meta Platforms are all heavily invested in AI, with their own developments in cloud computing, AI services, and advertising.

However, Nvidia stands apart as the key supplier of the hardware that makes AI possible.

Nvidia’s dominance in the chipmaking sector has made it a vital partner for these companies, all of whom are among Nvidia’s largest customers.

In 2024, Nvidia’s weight within the S&P 500 Index now stands at an impressive 7%, contributing to approximately 25% of the index’s total gain this year.

Although Nvidia briefly held the title of the world’s largest company in June, it’s now solidified its position for the long term, with the market continuing to place immense value on its AI-driven growth.

Will Apple’s Struggles Affect Nvidia’s Momentum?

While Nvidia is surging, Apple, once the top player on Wall Street, is facing challenges that could hinder its own growth.

The latest results from the tech giant showed concerns over weak revenue growth, particularly with its performance in China.

However, Apple remains heavily invested in AI, most notably through its new AI-powered iPhones.

Even as Apple navigates these challenges, Nvidia’s stronghold in AI infrastructure seems unshakable, with many analysts predicting continued growth.

How Are Other Companies Tied to Nvidia’s Success?

It’s not just the established tech giants that benefit from AI; the year’s top-performing stocks also have significant ties to the sector.

Nvidia’s own 183% share price increase ranks third in the S&P 500 this year, behind Vistra Corp, a power producer with a strong demand from AI applications, and Palantir Technologies, which specialises in data analysis software.

Nvidia’s stock rally can partly be attributed to growing optimism surrounding its Blackwell chip, which recently overcame engineering hurdles that had delayed its release.

This chip, crucial for AI applications, is expected to fuel Nvidia’s earnings growth in the coming quarters.

Is Nvidia Set to Keep Soaring in the Coming Years

Analysts are optimistic about Nvidia’s financial future, with expectations that its revenue will more than double in the current fiscal year.

The company’s growth doesn’t show signs of slowing down, with an anticipated 44% rise in revenue for the following year.

With Taiwan Semiconductor Manufacturing Company’s recent sales indicating robust AI demand, and OpenAI achieving a US$157 billion valuation, Nvidia’s position looks strong.

Dr Ainina stated,

"The implication of AI is extraordinarily large, and these big tech companies are investing hundreds of billions into it, with Nvidia benefiting the most. Overall, there continues to be a good picture for its prospects."

Nvidia’s dominance on Wall Street reflects more than just its impressive market cap.

It’s a testament to the critical role AI plays in driving global economic growth, with Nvidia poised at the centre of it all.