Nvidia becomes most valuable company in world, overtakes Apple after announcing partnership with Mukesh Ambani

Nvidia’s stock has climbed roughly 18% in October, bolstered by OpenAI’s recent $6.6 billion funding round. Nvidia supplies the chips used to train foundational AI models like OpenAI’s GPT-4.

On Friday, Nvidia briefly surpassed Apple as the world’s most valuable company, with its stock reaching a record market value of $3.53 trillion, just ahead of Apple’s $3.52 trillion, according to LSEG data. This milestone follows a rally fueled by high demand for Nvidia’s advanced AI chips. Nvidia had previously achieved this top spot in June before Microsoft and Apple reclaimed their positions, with the three companies remaining close in market value. Microsoft’s valuation currently stands at $3.20 trillion.

Nvidia’s stock has climbed roughly 18% in October, bolstered by OpenAI’s recent $6.6 billion funding round. Nvidia supplies the chips used to train foundational AI models like OpenAI’s GPT-4. “More companies are now embracing artificial intelligence in their everyday tasks, and demand remains strong for Nvidia chips,” said Russ Mould, investment director at AJ Bell. “It is certainly in a sweet spot, and so long as we avoid a big economic downturn in the United States, there is a feeling that companies will continue to invest heavily in AI capabilities, creating a healthy tailwind for Nvidia.”

This rally reached a peak last week as Taiwan Semiconductor Manufacturing Co. (TSMC) reported a strong quarterly profit due to high demand for AI chips. Nvidia’s upcoming third-quarter report in November will be closely watched; in August, Nvidia projected third-quarter revenue of $32.5 billion, with analyst expectations slightly higher at $32.90 billion, per LSEG.

Morgan Stanley analyst Joseph Moore remains optimistic about Nvidia’s long-term potential, although he noted the recent surge “raises the bar for earnings somewhat.” Moore, following a meeting with Nvidia CEO Jensen Huang, remarked on the strong demand for Nvidia’s next-gen Blackwell chips, which are fully booked for a year. The stock faced some pressure in August when Nvidia confirmed a delay in Blackwell chip production until the fourth quarter.

Nvidia, Apple, and Microsoft together represent a significant portion of the U.S. tech sector, making up about one-fifth of the S&P 500 index’s weight. Market interest in AI, alongside expectations for U.S. Federal Reserve rate cuts and a strong earnings season start, propelled the S&P 500 to a record high last week. Nvidia’s stock performance has attracted options traders, with its options consistently among the most traded, according to Trade Alert data. Nvidia’s stock has surged nearly 190% this year, driven by the generative AI boom and impressive forecasts.

Rick Meckler, partner at Cherry Lane Investments, commented on the stock’s appeal, saying, “The question is whether the revenue stream will last for a long time and will be driven by the emotion of investors rather than by any ability to prove or disprove the thesis that AI is overdone…I think Nvidia knows that near term, their numbers are likely to be quite remarkable.”

Reliance Industries and Nvidia have announced a partnership to develop large-scale AI infrastructure in India, aiming to boost the country’s artificial intelligence capabilities. The announcement was made during a fireside chat between Reliance Chairman Mukesh Ambani and Nvidia CEO Jensen Huang at the 2024 Nvidia AI Summit in Mumbai.

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