NVIDIA Becomes the World's Most Valuable Company (Update)

[Image source=Yonhap News]

NVIDIA has become the most valuable company in the world.

On the 18th (local time) in the New York stock market, NVIDIA closed up 3.51%, pushing its market capitalization beyond $3.34 trillion. This surpassed Microsoft (MS) with a market cap of about $3.2 trillion. Apple ($3.28 trillion) was pushed down to the third largest company by market cap. This is the first time NVIDIA has reached the number one spot in market capitalization.

NVIDIA's stock price has surged about ninefold since last year. This is due to the global boom in generative artificial intelligence (AI), which has increased demand for AI chips known as graphics processing units (GPUs), essential for training and inference of large language models (LLMs). Although big tech companies like AMD and Intel have entered the AI chip market, NVIDIA still holds more than 80% of this market.

The relatively large rise in NVIDIA's stock price on this day was driven by Wall Street raising NVIDIA's target price. According to Bloomberg News, Hans Mosesmann, an analyst at Rosenblatt Securities, raised NVIDIA's target price from $140 to $200. This is 47% higher than the closing price that day. It is the highest target price issued so far on Wall Street, suggesting that the market capitalization could approach $5 trillion.

Chris Roland, an analyst at investment firm Susquehanna, also raised NVIDIA's target price from $145 to $160. This applies a price-to-earnings ratio (PER) multiple of 51.5 times.

Additionally, there was news that the Technology Select Sector SPDR Fund (ticker XLK), an exchange-traded fund (ETF) tracking the S&P 500 technology sector, will significantly increase its weighting of NVIDIA through rebalancing. XLK is an ETF that currently holds over 20% each in Apple and MS, but NVIDIA's weighting is only about 6%, leading to criticism that its rise has not kept pace with the AI-driven rally.