NVIDIA's Triumphant Comeback: Surpasses Microsoft as AI Drives Market Cap to $3.4 Trillion

Market BriefMonday, Jun 9, 2025 4:09 am ET
2min read

As of last week, NVIDIA (NVDA) saw a rise of 1.24%, marking a 4.88% increase over the past week and a 5.54% year-to-date growth, bringing its latest market value to approximately $3.458 trillion. This upward momentum underscores NVIDIA's substantial gains amid the broader AI surge that has significantly fueled its revenue. The company's graphics processing units (GPUs) have become central to powering data centers and the growing demand for generative AI, contributing to a massive stock price increase of nearly 1500% over the past five years.

Recently launched, the Nintendo Switch 2, powered by NVIDIA's custom chips, quickly sold out at numerous retailers. Analysts suggest that should the Switch 2 replicate or exceed its predecessor's sales, it has the potential to enhance NVIDIA's embedded systems sector, albeit it remains smaller compared to its data center and gaming graphics card businesses. Boasting capabilities like 4K gaming support on TVs and advanced AI image upscaling, the new device showcases NVIDIA's ongoing technological innovations.

NVIDIA regained the title of the world's most valuable publicly listed company, surpassing Microsoft as its market cap hit $3.446 trillion. This marks another instance where NVIDIA has led the global market cap rankings, frequently contesting the top spot with tech giants Apple and Microsoft since June last year. The company's advancing position reflects the accelerated revenue growth driven by AI, with the latest quarterly report exceeding expectations with revenues reaching $44.1 billion, up 69% year-over-year. Data center operations, a pivotal segment, reported revenues of $39.1 billion, marking a 73% increase from the previous year.

Export control measures, notably the H20 restrictions enacted in April, posed significant challenges for NVIDIA. These constraints led to an estimated $7 billion impact this fiscal quarter. Forecasts for the second quarter of fiscal year 2026 anticipate revenues of approximately $45 billion, despite potential losses due to export limitations.

NVIDIA's impressive rebound over the past two months, with a market capitalization resurgence reaching $3.4 trillion, narrates a dramatic comeback following an earnings report that alleviated core concerns. A significant highlight includes a reduction in its revenue dependence on the Chinese market to 13% and successful expansions in the Middle East. Despite a shortfall from its historical peak in January, the company's current price-to-earnings ratio of 29 falls below its decade average, highlighting conservative market expectations for growth.

Analysts maintain an optimistic outlook for NVIDIA, largely due to anticipated increases in AI capital spending among tech nomenclature like Microsoft, Meta, Google, and Amazon, projected to rise by 6% in the next two years. The majority consensus among analysts remains bullish on the stock, with a notable target price suggesting further potential for upward gains.

As the AI era burgeons, NVIDIA, already a leading player in the AI semiconductor field, continues to expand its dominance in the global AI infrastructure landscape with its advanced chipsets crucial for developing large-scale AI models. These technological strides are poised to redefine the sector, solidifying NVIDIA's place at the forefront of the industry transformation.

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