AI darling Nvidia's market value surges closer to Apple
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[May 29, 2024] By
Zaheer Kachwala
(Reuters) - Nvidia's shares rallied around 6% to hit a record high on
Tuesday, leaving the AI chipmaker's stock market value about $100
billion away from overtaking Apple in a major reshuffle of Wall street's
biggest players.
Last trading at $1,128, Nvidia's market capitalization reached $2.8
trillion, compared to a market value of $2.9 trillion for Apple, which
is Wall Street's second-most valuable company after Microsoft.
Its stock surged as much as 8% to $1,149.39 during the session, an
intra-day record high. Apple's stock was down 0.2% in afternoon trading.
Nvidia's shares have surged nearly 13% since it forecast second-quarter
revenue above Wall Street expectations last week and announced a stock
split, which excited investors as they continue to bet on the AI poster
child.
"The market has been struggling to keep up with the company's ever
improving growth trajectory. At a mid-thirties forward earnings
multiple, this still doesn't feel like bubble territory," said Derren
Nathan, head of equity analysis at Hargreaves Lansdown.
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Nvidia recently traded at 36 times its forward profit estimates,
compared with 38 for Advanced Micro Devices and 21 for Intel, according
to LSEG data.
The company's shares have more than doubled so far this year after more
than tripling last year.
Nvidia, which has been one of the biggest beneficiaries of the AI boom,
reported a five-fold jump in revenue at its data center segment last
week as customers line up for their high-performance chips.
Alphabet, Microsoft, Amazon.com and other technology companies have been
competing for a limited supply of Nvidia's high-end chips as they race
to dominate AI computing.
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A smartphone with a displayed NVIDIA logo is placed on a computer
motherboard in this illustration taken March 6, 2023. REUTERS/Dado
Ruvic/Illustration/File Photo
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"Business is doing incredibly well, there are so many opportunities
to keep growing, and the AI theme still has legs. When the song is
that catchy, investors want to keep humming it all day long, said
Dan Coatsworth, investment analyst at AJ Bell when asked about the
stock's rally.
Long considered a must-own stock on Wall Street, Apple has
underperformed other Big Tech companies in recent months, falling
around 2% this year as it struggles with weak iPhone demand and
tough competition in China.
Microsoft overtook Apple as the world's most valuable company
earlier this year as it raced ahead of other tech firms due to gains
made by early investments in artificial intelligence across its
cloud services.
Microsoft's shares were down 0.4% on Tuesday, giving it a market
value of $3.1 trillion.
Apple has also been slower in rolling out generative AI, which can
generate human-like responses to written prompts, than rivals such
as Microsoft and Google, which are weaving them into products.
(Reporting by Zaheer Kachwala and Arsheeya Bajwa in Bengaluru;
Additional reporting by Noel Randewich in San Francisco; Editing by
Arun Koyyur)
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