NVIDIA ascended to the top of the global market rankings on Tuesday, surpassing long-time leader Microsoft, driven by its high-performance processors pivotal in the race for dominance in artificial intelligence technology. The chipmaker’s shares rose 3.5% to $135.60, pushing its market capitalization to $3.336 trillion. This milestone came shortly after it overtook Apple to claim the second most valuable company spot.

Microsoft, with a market value of $3.325 trillion, saw its shares decline 0.2%, while Apple, valued at $3.278 trillion, experienced a 1.3% decrease in its stock.

NVIDIA’s stock has surged by approximately 173% this year, far outpacing Microsoft’s 19% increase, fueled by soaring demand for its advanced processors amid supply constraints. Major tech players including Microsoft, Meta Platforms, and Alphabet are in a fierce competition to strengthen their AI computing capabilities and lead the emerging AI technology sector.

Tuesday’s market gain pushed NVIDIA’s stock to an all-time high, boosting its market cap by more than $103 billion. With over 80% market share in AI chips, NVIDIA has emerged as a significant beneficiary of the AI boom. Since its robust forecast a year ago, the company has consistently exceeded Wall Street’s expectations for revenue and profit, driven by overwhelming demand for its graphics processors as businesses rush to integrate AI applications.

In May, NVIDIA executives acknowledged that demand for its Blackwell AI chips could exceed supply well into the next year. The recent 10-for-one stock split effective June 7 has increased the appeal of its stock among individual investors, making it more accessible.

“A stock split lowers the share price, making it more affordable for retail investors to purchase. With NVIDIA’s 10:1 stock split, individual investors are the primary beneficiaries,” noted Sam North, market analyst at eToro.

NVIDIA’s market value surged from $1 trillion to $2 trillion in just nine months by February, and then accelerated to reach $3 trillion in June, underscoring its meteoric rise. Despite stellar stock performance, analysts have revised their expectations for NVIDIA’s future earnings growth, resulting in a decline in the stock’s earnings valuation.

According to LSEG data, NVIDIA’s current trading multiple stands at 44 times expected earnings, down from over 84 times expected earnings a year ago.

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