Nvidia Loses Market Cap Title to Microsoft as Shares Retreat

Facts

• Tech giant Nvidia has lost its position as the world’s most valuable company to Microsoft after a brief stint at the top spot this week with a market valuation of $3.34T.¹
• This comes as shares of the chipmaker, which have strongly outperformed both the S&P 500 index and the Nasdaq Composite Index so far this year, closed down 3.5% on Thursday — and again on Friday.²
• Nvidia lost over $200B in market capitalization these two days alone, falling to around $3.1T — lower than Apple's $3.2T and Microsoft's $3.3T.³
• Bloomberg News — citing Investment director at AJ Bell, Russ Mould — reported that the changes in Nvidia’s share prices were likely due to 'usual fluctuations in the stock market,' adding that with 'large companies,' such fluctuations 'can wipe or add hundreds of millions or even billions of dollars to their market value.”⁴
• Founded in 1991, the company was known mostly for making chips for gamers to run 3D titles during its first couple of decades in business. It now has approximately 80% of the burgeoning artificial intelligence (AI) chips market.⁵
• Every major tech company — including Amazon, Google, Meta, and Microsoft — uses Nvidia computer chips for its AI. Earlier this month, reports emerged that Elon Musk's xAI and China-based ByteDance also rely on Nvidia chips.⁶

Sources: ¹BBC News, ²Barrons, ³Fortune, ⁴Bloomberg, ⁵CNBC and ⁶Yahoo News.

Narratives

• Narrative A, as provided by Business Insider. Nvidia’s soaring success has only just begun, so this pullback must be seen as a buying opportunity. The company has hundreds of billions of dollars in long-term opportunity as generative AI hardware developments are still in the early years of its deployment cycle, with strong and growing demand in this critical field.
• Narrative B, as provided by The Motley Fool. While Nvidia may very well end up being an incredibly profitable business and an industry leader, its shares are currently ridiculously overvalued — and history tells us that they can indeed take a huge dive for multiple reasons. After all, the field of AI is far from being mature despite its current hype cycle.

Predictions