Nvidia Shares Dip 3% After Record Rally, Yielding Top Spot to Microsoft

Nvidia's shares fell nearly 3.5% on Thursday, causing the company to relinquish its title as the world's most valuable company to Microsoft. The chipmaker's market capitalization dropped significantly, settling at $3.22 trillion, with shares priced at $130.78.

In contrast, Microsoft's market value slightly decreased to $3.30 trillion, with shares down 0.4% at $444.8 in afternoon trading.

Market Valuation Shifts Among Top Tech Companies

The race to be the world's most valuable company remains competitive, with Nvidia, Microsoft, and Apple as the main contenders. Apple, under the leadership of CEO Tim Cook, had a market capitalization of $3.22 trillion, with shares dropping 2.2% to $210.10 in the afternoon.

Impact of Elon Musk’s Announcement on Related Stocks

Elon Musk's announcement on his social media platform, X, revealed that Dell Technologies and Super Micro Computer are supplying server racks for the supercomputer of his AI startup, xAI. This supercomputer aims to enhance the capabilities of its AI tool, Grok.

Following the announcement, shares of Dell Technologies and Super Micro Computer fell by 1% and 0.7%, respectively. These companies manufacture servers equipped with Nvidia chips, benefiting from the increasing demand for processors essential for AI applications.

Earlier this year, Musk disclosed that training the Grok 2 model required about 20,000 Nvidia H100 graphic processing units (GPUs), and future models like Grok 3 would need 100,000 Nvidia H100 chips.

Nvidia’s Dominance in AI Market

Jake Dollarhide, CEO of Longbow Asset Management, emphasized Nvidia's significant profits from AI, stating, "While Microsoft both spends and makes money in AI, Nvidia only makes money and lots of money and profits in AI.

That's why you cannot spell Nvidia without AI." Nvidia's stock price has nearly tripled this year, contributing to broader market gains. Similarly, Super Micro's shares have more than tripled in value, while Dell's stock has risen nearly 95%.

Broader Market Trends and Analyst Insights

The Philadelphia SE Semiconductor Index has surged nearly 34% since its recent low in April, reaching a lifetime high on Tuesday. Wedbush Securities analyst Dan Ives commented, "This will be a tech market in which the strong will get stronger as AI technology helps Big Tech stalwarts monetize their massive installed bases across the enterprise (Microsoft, Oracle, Dell, Amazon, etc.) and consumer landscape (Meta, Apple, Google) over the coming years."

Conclusion

Despite the recent drop in Nvidia's shares and its loss of the top spot to Microsoft, the company continues to be a dominant player in the AI market. With significant investments in AI technology, Nvidia's future growth prospects remain strong, supported by the increasing demand for AI processors and applications.

As the tech market evolves, the competition among industry giants like Nvidia, Microsoft, and Apple will continue to shape the landscape, driving innovation and market value.