Nvidia became the world's most valuable company on Tuesday, dethroning tech heavyweight Microsoft, as its chips continue to play a central role in a race to dominate the market for artificial intelligence.
Shares of the chipmaker climbed 3.2% to $135.21, lifting its market capitalization to $3.326 trillion, just days after overtaking iPhone maker Apple to become the second most valuable company.
The stock has surged about 173% so far this year, compared with a rise of about 19% in Microsoft shares.
Many investors believe its earnings can grow even more, which has caused its share price to soar, though some have questioned its sky-high valuation.
Tuesday’s share price rally means the market now values the company at $3.34 trillion, with the price having nearly doubled since the start of this year.
Eight years ago, the stock was worth less than 1% of its current price.
Competition among AI developers is fierce. Microsoft, Google-owner Alphabet, Meta and Apple are just some of the tech heavyweights battling to create a world-beating product.
This competition benefits Nvidia, which dominates the vast majority of the AI chip market.
As such, investors believe the company will continue to surge in value. Nvidia’s sales and profit figures have surpassed many analyst expectations in recent years.
In May, after its latest set of financial results were published, Quilter Cheviot technology analyst Ben Barringer said the company had "once again cleared a very high hurdle".
"Demand is showing no signs of switching off either," he added.
However, a minority are more cautious.
In February, Barclays credit analyst Sandeep Gupta argued that Nvidia’s large market share would be hard to maintain given the increasing number of rivals and questioned how Nvidia’s customers would monetise AI software.
