Nvidia surpassed Microsoft as the world's most valuable company

On Tuesday, Nvidia surpassed Microsoft to become the world's most valuable public company, with a market cap of $3.34 trillion. The milestone comes after a remarkable 170% surge in its share price this year, and a more than nine-fold increase since the end of 2022 fueled by the boom in generative artificial intelligence.

The chip-making giant faced a major crisis in its inception when it partnered with Sega to provide 3D chips for a new gaming console but could not deliver on its commitment. In the bid to make things up, Nvidia took six months to develop the RIVA 128, the first consumer GPU to integrate 3D acceleration in addition to traditional 2D and video acceleration, which Huang believes shocked the 3D market, saved the company, and put their company on the map. By confronting its mistake and seeking help, NVIDIA ensured its survival and future success.

In recent years, the company has seen many benefits from a boom in demand for training chips that run generative AI models, the most popular being OpenAI's ChatGPT. These high-end processors are central in a scramble to dominate AI technology. 

Nvidia's stunning surge in market value over the past year has become emblematic of a Wall Street frenzy driven by optimism about emerging AI technology. Nvidia has also been one by far the most traded companies on Wall Street, with daily turnover recently averaging $50 billion, compared to around $10 billion each for Apple, Microsoft and Tesla according to LSEG data. The company now accounts for about 16% of all trading in S&P 500 companies. 

A so-to-speak insatiable demand for Nvidia's processors has left the company tight in supply, as the company's AI chips are viewed as far superior to what the competition produces. 

Nvidia recently traded at 44 times the expected earnings, LSEG data showed, increasing the appeal for its highly valued stock among investors. Last week, the company split its stock 10 for one.

Since the blowout forecast about a year ago, the company has consistently breezed Wall Street's lofty expectations for revenue and profit, with the demand for its graphics processors outweighing their supply capacity. 

Nvidia executives said in May that demand for its Blackwell AI chips could exceed supply “well into next year.”