Nvidia Corp's shares closed at their highest ever on Monday, pushing the AI chipmaker closer to dethroning Apple as the world's most valuable company. Nvidia's stock rose 2.4 per cent to $138.07, driven by investor optimism over strong demand for the company's current and next-generation AI chips.
With a market value of $3.39 trillion, Nvidia now trails only Apple, which stands at $3.52 trillion, while surpassing Microsoft, valued at $3.12 trillion. Nvidia's rapid rise comes as it benefits from a heated competition between major technology firms, including Alphabet, Microsoft, and Amazon, to dominate the emerging AI sector.
According to a report by Reuters, TD Cowen analysts highlighted Nvidia's strong position in this landscape, noting that major players in AI are facing a "Prisoner's Dilemma," where each must keep investing to avoid falling behind. The firm reiterated its price target for Nvidia at $165, labeling it as their "Top Pick," and emphasized ongoing strong demand for Nvidia's current generation of AI chips despite delays in the production of its upcoming Blackwell chips.
Apple and Microsoft also saw gains, rising 2% and 0.7%, respectively, contributing to an increase in the S&P 500 index, which closed up 0.8% to a record high. Together, Nvidia, Apple, and Microsoft make up about a fifth of the S&P 500's weight, giving them significant influence over the index's performance.
Adding to the bullish sentiment, Taiwan Semiconductor Manufacturing Co, Nvidia's contract manufacturer, is expected to report a 40% increase in quarterly profit this week, thanks to surging demand for AI processors. Analysts predict that Nvidia's annual revenue could more than double to nearly $126 billion, driven by investments in AI data centers, according to LSEG data.