How Chip-Maker Nvidia Became the World's Most Valuable Company with AI Technology
How Chip-Maker Nvidia Became the World's Most Valuable Company with AI Technology

Chip-maker Nvidia has soared to become the world’s most valuable company after its share price reached an all-time high on Tuesday. The company's market value now stands at $3.34 trillion (£2.63 trillion), with its stock price nearly doubling since the beginning of the year. Nvidia's shares ended the trading day at almost $136, up 3.5%, making it more valuable than tech giant Microsoft. Earlier this month, it even surpassed Apple in market value.

The Rise of Nvidia
Nvidia's rapid ascent is largely due to its dominance in producing chips crucial for artificial intelligence (AI), which analysts at Wedbush Securities have termed the "new gold or oil in the tech sector." According to a note from Wedbush Securities, "We believe over the next year the race to $4 trillion market cap in tech will be front and center between Nvidia, Apple, and Microsoft."

However, some analysts are skeptical about the potential for continued massive gains, citing increasing competition. Despite these concerns, Nvidia's growth has been nothing short of spectacular. Just eight years ago, the company's stock was worth less than 1% of its current value. At that time, Nvidia was primarily known for its competition with AMD in the graphics card market.

AI and Bitcoin Booms
In recent years, Nvidia has greatly benefited from the surge in demand for chips used to train and operate generative AI models, such as OpenAI's ChatGPT. Additionally, the company saw a significant boost in sales during the Bitcoin mining boom of 2020, which increased the demand for its graphics cards.

Leadership and Celebrity Status
The impressive rise of Nvidia has also brought increased attention to its CEO, Jensen Huang. The 61-year-old electrical engineer has been dubbed the "Taylor Swift of tech" for his growing celebrity status.

Intense AI Competition
The competition among AI developers is intense, with major players like Microsoft, Google-owner Alphabet, Meta, and Apple all striving to create leading AI products. This competitive landscape benefits Nvidia, which not only develops its own AI technology but also dominates the AI chip market.

Nvidia’s sales and profit figures have consistently exceeded analyst expectations in recent years. In May, after the release of its latest financial results, Quilter Cheviot technology analyst Ben Barringer noted that the company had "once again cleared a very high hurdle," adding that demand shows no signs of slowing down.

However, not all analysts are entirely optimistic. In February, Barclays credit analyst Sandeep Gupta expressed concerns about Nvidia's ability to maintain its large market share amidst growing competition and questioned how its customers would profit from AI software.

Despite some doubts about future growth, Nvidia’s unprecedented rise to become the world's most valuable company highlights its critical role in the evolving AI and tech landscape.

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