Nvidia's stock market value hits $4 trillion on AI dominance

By Shashwat Chauhan

(Reuters) -Nvidia briefly reached a market capitalization of $4 trillion on Wednesday, making it the first company in the world to reach the milestone and solidifying its position as one of Wall Street's most-favored stocks.

Shares of the leading chip designer rose as much as 2.8% to an all-time high of $164.42, benefiting from an ongoing surge in demand for artificial-intelligence technologies. 

The company's stock ended with a gain of 1.80%, leaving it with a market value of $3.97 trillion.

Nvidia's soaring market value underscores Wall Street's confidence in the rapid growth of AI, with the company's high-performance chips forming the backbone of this technological advance.

"It highlights the fact that companies are shifting their asset spend in the direction of AI and it's pretty much the future of technology," said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.

The stock's recent rally follows a sluggish start to the year, when the emergence of a Chinese discount artificial-intelligence model developed by DeepSeek shook confidence in stocks linked to the sector. 

Nvidia achieved a $1 trillion market value for the first time in June 2023 and tripled it in about a year, faster than Apple and Microsoft, the only other U.S. firms with market values above $3 trillion.

Microsoft is the second-most valuable U.S. company, with a market capitalization of $3.74 trillion. Its shares gained 1.4% on Wednesday to close at $503.51. 

Nvidia has rebounded about 74% from its lows in April, when global markets were jolted from U.S. President Donald Trump's tariff volley. 

Optimism around trade partners reaching deals with the U.S. has lifted stocks of late, with the S&P 500 hitting an all-time high. 

Nvidia accounts for 7.3% of the S&P 500. Apple and Microsoft account for around 7% and 6%, respectively. 

Nvidia is now worth more than the combined value of the Canadian and Mexican stock markets, according to LSEG data, and it exceeds the total value of all publicly listed companies in the UK. 

Its stock recently traded at a 12-month forward price-to-earnings ratio of 32, below its three-year average of 37, according to data compiled by LSEG.   

While Nvidia's chips dominate the AI industry, Amazon, Microsoft, Alphabet and other major customers have faced pressure from investors to rein in their heavy spending on AI. 

As well, Advanced Micro Devices and other rivals aim to take some of Nvidia's market share by selling lower-cost processors.

Nvidia reported total revenue of $44.1 billion in the first quarter, marking a 69% jump from a year ago. 

For the second quarter, Nvidia expects revenue of $45 billion, plus or minus 2%. It will report second-quarter results on August 27. 

Including the session's gains, Nvidia is up about 22% this year compared with a nearly 15% rise in the Philadelphia SE Semiconductor Index.

(Reporting by Shashwat Chauhan and Johann M Cherian in Bengaluru; Additional reporting by Noel Randewich in San Francisco; Editing by Chuck Mikolajczak, Arun Koyyur and Matthew Lewis)