Nvidia's stock skyrockets amid AI boom: Will Apple fall from the top?

Nvidia, which briefly held the title of the most valuable company in June, saw its market value surge to $3.39 trillion on Monday

Nvidia’s stock soared to a record close on Monday, placing the artificial intelligence (AI) chipmaker on the verge of overtaking Apple as the world’s most valuable company. Bolstered by strong investor confidence in the rising demand for its current and next-generation AI processors, Nvidia’s shares jumped 2.4 per cent, ending the day at $138.07, reported The Economic Times.

The Santa Clara-based tech giant, which briefly held the title of the most valuable company in June, saw its market value surge to $3.39 trillion. This puts it just behind Apple’s $3.52 trillion and ahead of Microsoft, which holds a $3.12 trillion valuation. For months, the three tech titans have been neck-and-neck in a battle for the top spot in market capitalisation.

Nvidia’s dominance on Wall Street has been driven by its leading position in the race to power AI advancements, as tech giants such as Alphabet, Microsoft, and Amazon compete to control the burgeoning AI space.

“We believe the major companies in AI ... face an investment environment characterized by a Prisoner's Dilemma - each is individually incentivised to continue spending, as the costs of not doing so are (potentially) devastating,” analysts at TD Cowen said in a report. They reaffirmed Nvidia as their ‘Top Pick’, maintaining a $165 price target, citing the strong demand for its existing AI chip lineup.

Despite confirming in August that production of its next-generation Blackwell chips had been delayed until the fourth quarter, Nvidia downplayed the impact, stating that customers remain eager to buy its current offerings.

As anticipation builds for the upcoming quarterly earnings reports, Apple gained nearly 2 per cent, while Microsoft edged up by 0.7 per cent, contributing to the S&P 500’s rise by 0.8 per cent, reaching an all-time high. Nvidia, Apple, and Microsoft combined represent about 20 per cent of the S&P 500’s overall weight, making their movements crucial to the index’s performance.

Adding to the optimism, Taiwan Semiconductor Manufacturing Co, which produces Nvidia’s processors, is expected to report a 40 per cent leap in quarterly profits on Thursday, reflecting the surging demand for AI-related technology.

Analysts further project Nvidia’s annual revenue to more than double to approximately $126 billion, fuelled by ongoing investments in AI data centres. However, while Nvidia’s rally has propelled the broader market to record highs, concerns linger about whether the current enthusiasm for AI will hold if signs of a slowdown in AI spending emerge.