AI Boom Fuels Nvidia Stock Rally; MCap Nears $4 Trillion Making AI Chipmaker World's Most Valuable Firm

Nvidia's share price reached a new peak on Thursday, nearing a market cap of $4 trillion. This achievement makes it the most valuable publicly traded company globally, driven by strong investor confidence in artificial intelligence. Nvidia's shares climbed 2.4% during the day to $160.98, briefly valuing it at $3.92 trillion, surpassing Apple's previous record of $3.915 trillion set in December 2024.

At the close of trading, Nvidia's stock settled at $159.34, up 1.33%, with a market valuation of $3.89 trillion, placing it ahead of both Apple and Microsoft. Microsoft holds the second spot on Wall Street with a market cap of $3.71 trillion as its shares rose 1.58% to finish at $498.84. Meanwhile, Apple's shares increased by 0.52% to $213.55 each, giving it a market value of $3.19 trillion.

Nvidia's AI Chip Dominance

Since 2021, Nvidia's market value has surged nearly eightfold from $500 billion to almost $4 trillion due to soaring demand for its high-performance chips amid the AI boom. Initially known for graphics processors for video games, Nvidia is now central to the generative AI surge, powering data centers and AI infrastructure for major tech companies.

The rise in Nvidia's stock also boosted the broader market, with the Nasdaq Composite closing at a record high of 20,601.10 points, an increase of 207.97 points or 1.02%. According to LSEG data reported by Reuters, Nvidia's current valuation surpasses the combined market capitalization of all publicly traded companies in the UK and is larger than the stock markets of Canada and Mexico.

Market Influence and Valuation

Despite its rapid stock rise, Nvidia trades at about 32 times analysts' projected earnings over the next year-below its five-year average price-to-earnings ratio of around 41-indicating accelerating earnings growth that outpaces share price gains.

Nvidia now represents 7% of the S&P 500 index. Alongside Microsoft, Apple, Amazon, and Alphabet, these five tech giants constitute 28% of this benchmark index-highlighting their significant impact on US equities.

The company's latest AI chips are instrumental in training advanced large language models, driving high demand from cloud providers and tech leaders alike. A competitive race among Microsoft, Amazon, Alphabet, Meta Platforms, and Tesla to develop next-generation AI infrastructure has further fueled demand for Nvidia's advanced processors.

"The views and recommendations made above are those of individual analysts or broking companies," states Mint's disclaimer regarding investment advice.