Nvidia Overtakes Microsoft as AI Powers Stock to 6-Week Record High

With shares up about 4.2% by mid-afternoon, Nvidia’s share price hit its best level during the day since August 26.

On Monday, Nvidia stock went up even though most other big tech stocks went down. This helped the AI giant recover its position as the world’s second-largest company during the AI boom.

With shares up about 4.2% by mid-afternoon, Nvidia’s share price hit its best level during the day since August 26.

Because of this, the Silicon Valley company’s market capitalization reached its best level since August. At $3.19 trillion, it surpassed Microsoft ($3.07 trillion) as the world’s second-largest company for the first time in six weeks, and it now only trails Apple’s $3.4 trillion valuation.

Even though the S&P 500 fell 0.6% because of higher bond rates and oil prices, Nvidia stock had a good start to the week. Moving U.S. monetary policy had been good for stocks, but these factors cancelled each other out.

Apple’s stock fell 1.3% on Monday, Microsoft’s 0.7%, Alphabet’s 1.4%, Amazon’s 2.8%, and Meta’s 0.9%. The only tech company that didn’t lose value was Nvidia.

Why is Nvidia’s Stock Benefiting from Strong AI Demand?

Super Micro Computer, another company that makes AI technology, said on Monday that sales of its liquid cooling products used with Nvidia’s graphics processing units (GPUs) were strong this quarter. This was good news for Nvidia, which makes a full suite of custom AI technology for high-end applications like computer language models. Melius Research expert Ben Reitzes wrote to clients that the setup is still pretty darn good for Nvidia stock, even though it has been on a long-term rise. This also helped the stock price. Microsoft, Alphabet, and OpenAI, the parent company of ChatGPT, are all spending a lot of money on AI, which Reitzes says should boost demand for Nvidia’s core (GPUs). Nvidia’s billionaire CEO Jensen Huang has been saying over and over that demand for its AI goods is so huge and crazy that expectations are high.

Monday is the latest in a month of huge gains for Nvidia. Since September 6, the company has gained 26%, much more than the S&P’s 6% gain and its five-trillion-dollar peers’ 7% average gain. In June, when its share price hit a still-record $140.76, Nvidia was for a short time the biggest company in the world. Before, Nvidia was mostly known for its video game business. But when profits skyrocketed during the generative AI boom, the company became a Wall Street favourite. In the past two years, Nvidia’s value has grown tenfold.