Nvidia beats Microsoft to become world's most valuable company

On Tuesday, Nvidia achieved the status of being the utmost valuable company globally when its stocks skyrocketed, reaching a historic peak.

At the end of the trading day, the stock reached a value of approximately $136, increasing by 3.5%. This surge in value propelled it to surpass Microsoft in worth, an accomplishment it had already achieved over Apple earlier this month.

Nvidia produces computer chips that are essential for the operation of artificial intelligence (AI) software. As a result of the high demand for these products, the company has experienced an increase in both its sales and profits in recent years.

There are a lot of investors who think that the earnings of the company may increase even more and this is why the price of its shares is going up. However, there are some who doubt the very high value attributed to it.

The rise in the company's share price on Tuesday led to an increase in their overall market value to $3.34tn (£2.63tn). This is a significant increase, as the price has almost doubled since the beginning of 2021.

The price of the stock today is over 100 times its value from eight years ago.

There is a strong competition between developers of AI. Tech giants such as Microsoft, Alphabet (owner of Google), Meta and Apple are all fighting to produce the best product in the world.

This contest proves advantageous for Nvidia as they hold a firm grip on the AI chip market.

Therefore, shareholders have faith that the firm will keep experiencing remarkable growth. Nvidia has been exceeding the forecasts of numerous analysts in terms of revenue and earnings during the last few years.

During the month of May, following the publishing of Quilter Cheviot's most recent financial results, Ben Barringer, a technology analyst at the company, expressed that they had surpassed an exceptionally high standard yet again.

He further commented that the demand remains steady and there are no indications of it declining anytime soon.

Nevertheless, a small group of people are more careful.

Back in February, Sandeep Gupta, who works as a credit analyst for Barclays, put forward the argument that Nvidia would find it challenging to hold onto their substantial market share with more and more competitors in the mix. Additionally, he raised concerns as to how Nvidia's customers would be able to generate profits from AI software.