image Source, Getty Images
- Author, Michel Labiac
- Role, Business Reporter
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Chipmaker Nvidia became the world's most valuable company on Tuesday after its share price hit an all-time high.
It is now worth $3.34 trillion (£2.63 trillion), having almost doubled in value since the beginning of the year.
The stock ended the day up 3.5% at nearly $136, making it more valuable than another tech giant, Microsoft, which overtook Apple earlier this month.
The Californian company's rapid growth is due to its dominance in what analysts call “the new gold or oil in the tech sector” – chips needed for artificial intelligence (AI).
Speaking at the event in Copenhagen, Chris Penrose, global head of business development for telecommunications at Nvidia, said the record valuation is the culmination of more than 30 years of work in computing and AI.
He predicted further growth in this sector.
“The journey of generative AI is truly transforming businesses and telecom companies around the world,” he said.
“We are just at the beginning.”
Analysts at Wedbush Securities agree.
“We believe the race to $4 trillion in market capitalization in the technology sector next year will center on Nvidia, Apple and Microsoft,” it said in a note earlier this week.
However other commentators have questioned whether Nvidia will have any significant advantage in the future, given the increasing competition it faces.
get up and move on
There is no doubt, though, about how brilliantly it has evolved.
Eight years ago, this stock was worth less than 1% of its current value.
At the time, Nvidia's value came from competing with its rival AMD to make the best graphics cards.
In recent years, however, it has benefited from a surge in demand for chips that train and run generative AI models, the most famous of which is OpenAI’s ChatGPT.
The company also benefited significantly from the bitcoin mining boom in 2020, which saw sales of its graphics cards increase sharply.
The rise of this technology giant is reflected in the increasing popularity of its chief, Jensen Huang.
Some have dubbed the 61-year-old electrical engineer the “Taylor Swift of technology” because of the celebrity status she has achieved.
The competition among AI developers is very fierce. Microsoft, Google-owned Alphabet, Meta, and Apple are some of the big tech companies struggling to create world-class products.
This competition benefits Nvidia, which continues to dominate much of the AI chip market while also developing its own AI technology.
Nvidia's sales and profit figures have far exceeded many analysts' expectations in recent years.
In May, after its latest financial results were published, Quilter Cheviot technology analyst Ben Barringer said the company had “overcome a huge hurdle once again”.
“Demand also shows no signs of slowing down,” he added.
Some people, however, are more cautious.
In February, Barclays credit analyst Sandeep Gupta argued that Nvidia's large market share would be hard to maintain given the growing number of competitors and questioned how Nvidia's customers would make money from its AI software.