Nvidia has become the world’s most valuable company, overtaking tech giants Apple and Microsoft.
On Tuesday, Nvidia’s shares rose by 3.5%, reaching US$135.58 per share (after its 10-for-1 stock split) and pushing its market capitalisation to an impressive US$3.335 trillion.
This rise came shortly after Nvidia surpassed Apple, the second most valuable company, according to Reuters reports.
Microsoft, now in second place, saw its market value dip to US$3.317 trillion following a 0.45% drop in share prices. Apple also experienced a decline, with its stock slipping over 1%, bringing its market capitalisation down to US$3.286 trillion.
This reshuffling at the top highlights the competitive nature of the tech industry, especially in areas driving advancements in artificial intelligence (AI).
The increase in Nvidia’s stock has significantly impacted major indices. The S&P 500 and Nasdaq have reached record highs, supported by the strong performance of tech stocks, with Nvidia leading the way.
Despite this positive trend, some investors are cautious. They worry that the current enthusiasm for AI might decrease if spending on the technology slows down.
Steve Sosnick, Interactive Brokers’ chief market strategist, noted, “It’s Nvidia’s market; we’re all just trading in it.”
One notable aspect of Nvidia’s rise is its dominance in trading volume. Nvidia has become the most traded company on Wall Street, with daily turnover averaging around US$50 billion.
In comparison, trading volumes for Apple, Microsoft, and Tesla are significantly lower, each averaging around US$10 billion.
This high trading volume means Nvidia now accounts for about 16% of all trading activity among S&P 500 companies, highlighting its central role in the current market landscape.
Tuesday’s gain propelled Nvidia’s stock to an all-time high, adding over US$110 billion to its market capitalization. This increase is roughly equivalent to the entire market value of Lockheed Martin.
Nvidia’s market capitalization also rose from US$1 trillion to US$2 trillion within nine months, reaching US$2 trillion in February, and then took just over three months to surpass US$3 trillion in June.
However, the rapid rise of Nvidia and the overall excitement for AI have led some market watchers to urge caution.
The technology sector is known for its volatility, and market sentiment can change quickly. While Nvidia’s current growth is promising, the sustainability of this growth remains a subject of discussion among analysts and investors.
Oliver Pursche, Wealthspire Advisors’ senior vice president in New York, noted:
“Nvidia has been getting a lot of positive attention and has been doing a lot of things very correctly, but a small misstep is likely to cause a major correction in the stock, and investors should be careful.” /TISG
Read also: NVIDIA’s 10-for-1 stock split: Should you or should you not buy into the illusion
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