Nvidia's Stock Surpasses Apple's; Propelled by AI-Driven Demand for Chips
Summary:
US chipmaker Nvidia has seen its stock price exceed Apple's by over 25 times since 2024, driven by the impending 10-to-1 stock split and increased demand for semiconductor chips due to AI applications. Despite a short-term dip, Nvidia has marked a substantial rise in its shares. It has momentarily surpassed Apple in market capitalization, becoming the second most valuable firm globally, before sliding back to third. AI development giants extensively employ Nvidia's GPU chips, further boosting demand.
Since the start of 2024, Nvidia, a leading US chipmaker, has left Apple lagging in its wake, with its stock price outpacing Apple's by a whopping 25 times. The imminent 10-to-1 stock split has set the Nvidia (NVDA) shares soaring by over 150%, a stark contrast to Apple's (AAPL) measly 6% rise, based on Nasdaq data. The year-to-date chart reflects this trend. Moreover, Nvidia has maintained this lead in the short term as well, with a 34% monthly increase in price compared to Apple's meager 7%.
Nvidia, being the principal chip manufacturer globally, has seen an upsurge in its valuation due to the growing need for semiconductor chips. This demand arises predominantly from the application of artificial intelligence (AI) algorithms.
Despite Nvidia's stock experiencing a slight fall of 0.25% in pre-market trading ahead of the stock split, it has enjoyed a 10% increase in the past five days, as per Yahoo Finance data.
Following the footsteps of firms like Apple, Tesla, Amazon, and Alphabet, Nvidia has become the fifth member of the "Magnificent Seven" stocks to undergo a split since 2022. Despite attracting more retail interest, this split could trigger additional volatility, warns Adam Coons, Winthrop Capital's chief investment officer.
Last week, Nvidia attained a $3 trillion market capitalization, spurred on by the surge in demand for semiconductor chips. For a brief moment on June 5, it outpaced Apple to become the world's second-largest company, only to slip back to the third spot. At present, Nvidia is valued at $2.97 trillion.
Top-tier AI development firms, including OpenAI, Google, and Microsoft, extensively use Nvidia's graphical processing unit (GPU) chips, making Nvidia a household name in AI hardware solutions. This factor heavily contributes to the demand for this chip-making giant.
Published At
6/10/2024 3:08:16 PM
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