Nvidia shares are up more than 170% so far this year, and gained a quarter after the company reported first-quarter earnings in May. The stock has increased more than ninefold since the end of 2022, coinciding with the emergence of artificial intelligence.
Nvidia has about 80% of the market for AI chips used in data centers, a business that has ballooned into OpenAI, Microsoft, Alphabet, Amazon, Meta.
In the most recent quarter, revenue from Nvidia's data center business jumped 427% from a year earlier to $22.6 billion, accounting for 86% of the company's total sales.
Shares of Apple fell about 1% during trading on Tuesday, giving it a market value of $3.28 trillion. Shares of Microsoft fell less than a percentage point, giving it a market capitalization of $3.32 trillion.
Founded in 1991, Nvidia spent its first few decades primarily as a hardware company that sold chips to gamers to run 3D titles. It also bundles in cryptocurrency mining chips and cloud gaming subscriptions.
But in the past two years, Nvidia shares have soared as Wall Street has come to recognize the company's technology as the engine behind the explosion in AI. The rally has boosted co-founder and CEO Jensen Huang's net worth to $117 billion, making him the world's 11th richest man. Forbes.
Microsoft shares are up about 20% so far this year. The software company has also been a major beneficiary of the AI boom, after taking a significant stake in OpenAI and integrating the startup's AI models into its most prominent products, including Office and Windows. Microsoft is one of the biggest buyers of Nvidia's graphics processing units (GPUs) for its Azure cloud service. The company unveiled a new generation of laptops designed to run its AI models called Copilot+.
Nvidia is a newcomer to the title of Most Valuable American Company. For the past few years, Apple and Microsoft have been trading on this topic.
Nvidia's rise has been so rapid that the company is not yet included in the Dow Jones Industrial Average, a benchmark of 30 stocks that includes the historically most valuable U.S. companies. Along with its earnings release last month, Nvidia announced a 10-for-1 stock split, effective January 7.
The split gives Nvidia a better shot at adding to the Dow, a price-weighted index that means companies with higher share prices — rather than market caps — have more influence on the benchmark.
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