Nvidia briefly overtakes Apple as world’s most valuable company amid soaring AI demand

In a nutshell: Nvidia briefly managed to dethrone Apple as the world’s most valuable company. With demand for the chipmaker’s AI silicon showing no signs of letting up anytime soon, Team Green is poised to cement itself as the new king of the market cap before long.

On Friday, Nvidia’s market cap soared to $3.53 trillion during trading, nudging just past Apple’s $3.52 trillion valuation. While Apple’s shares ended the day up a modest 0.4 percent, Nvidia closed 0.8 percent higher with a $3.47 trillion market cap – just slightly lower than the Cupertino powerhouse. The movement displaced Microsoft from its second-place seat, which it has held since it accomplished a similar feat in January. The Redmond titan finished Friday’s trading at a $3.18 trillion valuation, up 0.8 percent.

Its quick trip to the top marks the second time Nvidia has sat above its rivals. In June, the chipmaker briefly claimed the crown before being overtaken again by the tech titans Microsoft and Apple. The three companies have been running neck-and-neck all year, with AI becoming increasingly crucial in each firm’s portfolio.

Once known primarily as a supplier of graphics processors for gaming rigs, Nvidia has transformed into the heavyweight champion of AI chipmaking. Its processors power data-hungry AI models from Microsoft, Google, Meta, and others and have little competition. Overall, Nvidia’s stock has surged a whopping 190 percent this year, propelling CEO Jensen Huang into the ranks of the world’s wealthiest individuals.

One of the most recent spikes was driven by blowout earnings – up 36 percent year over year – reported by TSMC, the world’s top contract chipmaker, fueled by an appetite for its AI chips. Another boost came from a $6.6 billion funding round for OpenAI earlier this month, which buoyed optimism about data center demand.

In contrast, Apple has faced dull demand for its smartphone lineup. Flagship iPhone sales dipped 0.3 percent in China last quarter, while rival Huawei’s phone sales surged by 42 percent. The diverging fortunes highlight how AI has reshuffled the deck. Investors continue to rally around companies facilitating the AI revolution while being skeptical about the long-term growth of more mature consumer hardware businesses.

Thanks to tech stocks in general, the overall stock market has seen a banner year, as optimism around AI, expectations of considerably lower US interest rates, and a solid start to the earnings season have propelled the S&P 500 to new highs.