Nvidia's AI Chips Propel Surge, Closing in on Apple as Second Most Valuable Company

Nvidia is on the brink of surpassing Apple to become the world's second-most valuable company.

The semiconductor giant's recent success has been driven by the widespread adoption of its high-end chips in artificial intelligence (AI) applications.

Nvidia's AI chips drive its market value to $2.72 trillion, nearing Apple’s $2.93 trillion, fueled by soaring demand in AI applications and data centers.

Nvidia's Rapid Growth

Nvidia, a leading semiconductor company known for its advanced graphics processing units (GPUs), is closing in on Apple's market value.

Reuters tells us that over the past year, Nvidia's stock has nearly tripled, pushing its market valuation to $2.72 trillion. This rapid growth contrasts with Apple's valuation of $2.93 trillion, a company that has long dominated Wall Street.

This major shift has been unfolding over the past year, culminating in Nvidia's potential to surpass Apple in market value. Nvidia's influence spans across the US stock markets, with heavy weighting in the S&P 500 and the Nasdaq, driving these indices to record highs.

How the AI Boom Is Boosting Nvidia

Nvidia's ascension is primarily fueled by its crucial role in the AI sector. Its GPUs are integral to the functionality of AI applications, such as OpenAI's ChatGPT.

The chip company's financial performance has been exceptional. In the three months ending April 30, Nvidia reported $26 billion in sales and earnings per share (EPS) of $6.12.

These figures exceeded analysts' projections, who had anticipated an adjusted EPS of $5.65 on revenue of $24.69 billion. Nvidia also projected revenue for the current quarter at $28 billion, outstripping Wall Street's expectations of $26.6 billion.

Nvidia's data center division has also been a significant driver of its growth. This division, which focuses on AI-intensive applications, generated $22.6 billion in revenue last quarter, a staggering 427% increase year-over-year.

CFO Colette Kress highlighted that large cloud providers contributed about 45% of the company's data center revenue.

Fastest Company to Grow from $1 Trillion to $2 Trillion

Nvidia became the fastest company to grow from $1 trillion to $2 trillion in 2024, outpacing tech giants like Amazon and Google.

Its recent earnings report further cemented its position, with a net income for the quarter ending April 28 of $14.88 billion, or $5.98 per share, compared with $2.04 billion, or 82 cents per share, a year earlier.

The company's stock performance has been equally impressive. Nvidia shares topped $1,000 for the first time in extended trading and rose 7% following a robust earnings report. Additionally, Nvidia announced a 10-for-1 stock split to make shares more accessible to employees and investors.

Nvidia's influence extends beyond its financial achievements. The company's next-generation AI chip, Blackwell, is expected to drive further growth, with CEO Jensen Huang stating, "We will see a lot of Blackwell revenue this year."

Nvidia's AI chips are not only essential for AI applications but also for the supporting infrastructure, as evidenced by the $3.2 billion in networking revenue reported, primarily from its InfiniBand products.

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