Nvidia Passes Microsoft in Value, Heightening Risks

Nvidia is No. 1! A 3.5% rally in the artificial intelligence chipmaker’s stock on Tuesday, as most other tech stocks fell, catapulted its market capitalization above that of both Microsoft and Apple for the first time. It ended the day worth $3.34 trillion, while Microsoft was valued at $3.31 trillion and Apple was at $3.29 trillion. Those are big numbers: By comparison, the collective value of all stocks in the U.K., the biggest stock market in Europe, is $3.18 trillion, Bloomberg reported on Monday.

Not to be a pessimist, but why does it feel like Nvidia’s relentless rally—the stock is up 174% so far this year, according to Koyfin, while the other big tech stocks are up between 10% and 20%—is a correction waiting to happen? Sure, Nvidia’s stock has risen in line with its revenue, which went up 262% in its fiscal first quarter ended April, reflecting intense demand for its specialized chips. But we published a deep dive into the company today, which pointed out that CEO Jensen Huang is worried. He’s surely conscious that the higher Nvidia rises, the harder it could fall. As the story noted, the big tech companies buying many of his chips are making enormous investments in AI technology with an uncertain return—a reality that could cause them to pull back if business doesn’t end up following their spending.