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The AI chip maker leapfrogged Apple to become the second most valuable U.S. company on Wednesday
By
Colin Laidley
:max_bytes(150000):strip_icc()/Colin-Laidley_BW_WebReady-31-47dab5c7d8754af0bb30bf67d0c3f08a.jpg "Nvidia Market Cap Crosses $3 Trillion (1)")
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Colin is an Associate Editor focused on tech and financial news. He has more than three years of experience editing, proofreading, and fact-checking content on current financial events and politics. He received his M.A. in journalism from The New School and his B.A. in history and political science from McGill University.
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Updated June 05, 2024
:max_bytes(150000):strip_icc()/NewsImage-NVIDIAPreview-final-2570de8a75db416b88f6520e7e5bc1fb.png "Nvidia Market Cap Crosses $3 Trillion (2)")
Key Takeways
- Nvidia stock's meteoric rise propelled its market capitalization above $3 trillion and into the position of America's second-most valuable company on Wednesday.
- Nvidia is the third U.S. company with a market value exceeding $3 trillion. Apple was the first to reach that milestone in 2023 while Microsoft achieved the feat earlier this year.
- Nvidia's ascent has been the fastest. It went from $2 trillion to $3 trillion in a record 96 calendar days. Microsoft took 649 days to do so, while Apple took 718 days.
Nvidia (NVDA) on Wednesday became America's second-most valuable company and only the third U.S. company to reach a market capitalization of $3 trillion, a major milestone the AI chipmaker has reached in record time.
Nvidia's Historic Surge
Nvidia shares surged 5.2% to $1,224.40 on Wednesday, launching it into the ranks of $3 trillion companies. The only other companies to have ever achieved the feat are Apple (AAPL), the first to do it, and Microsoft (MSFT), which is currently the world's most valuable company with a market cap of more than $3.15 trillion.
Nvidia wasn’t the first company to $3 trillion, but its ascent has been the steepest. Based on closing valuations, Microsoft took 649 calendar days to rise from $2 trillion to $3 trillion, while Apple took 718 days. Nvidia did it in 96 calendar days.
To be sure, Nvidia’s climb has coincided with a bull market, while Apple and Microsoft had to slog through 2022’s bear market to add their third trillion. Meanwhile, Nvidia’s astronomical growth has, arguably, been instrumental in sustaining today’s bull market.
How Did We Get Here?
The chipmaker, once known for its top-of-the-line graphics cards used in gaming PCs, has consistently blown past impossibly high earnings expectations over the last two years amid booming demand for artificial intelligence. In May, it reported that first-quarter revenue tripled from the year before while profit rose sevenfold.
Nvidia has established itself as the clear leader in AI semiconductors, and the company may have extended its lead Sunday when CEO Jensen Huang unveiled its next-generation AI platform. The system, dubbed Rubin, will succeed Nvidia’s Blackwell platform, which was unveiled mere months ago, in 2025. Huang also said the company would double the pace at which it develops new chips to keep up with the breakneck speed of AI evolution.
Analysts see plenty of room for Nvidia’s earnings and stock to run. Bank of America raised its price target on the stock to $1,500, the highest on Wall Street, following Sunday’s announcement. BofA analysts estimated that “converting global data centers to accelerated computing could require $250-$500bn annually and we are only 20-30% into that process that could last another 3-5 years.”
The stock’s rise has been meteoric. Shares have more than doubled in value so far this year after tripling last year. But by some measures, shares are cheap. In a separate BofA note on Wednesday, analysts estimated that shares currently trade at less than 1x the company’s price/earnings-to-growth ratio (PEG), far below the S&P 500 at about 2x PEG.
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Bank of America. "US Semiconductors State of the Union: rational exuberance, top 5 industry debates and playbook."
BofA Securities. "Nvidia - Management mtg.: opportunity + execution as customers race to deploy AI."
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