Nvidia (NASDAQ:NVDA) has become the most valuable name among U.S. equities this week. The rapidly growing chipmaker took the title from Microsoft (NASDAQ:MSFT). NVDA stock is up 187% year-to-date.
Investors Can’t Get Enough of NVDA Stock
Propelled by optimism about the growth of artificial intelligence (AI), NVDA stock had soared 43% in the previous month heading into today. As a result, the shares’ market capitalization has eclipsed $3.3 trillion, making it the most valuable firm in the U.S. stock market.
Before overtaking Microsoft, Nvidia’s market capitalization eclipsed that of Apple (NASDAQ:AAPL) on Friday.
Nvidia’s graphics processing units (GPUs) create the AIs that data centers are currently utilizing. The company’s big competitive advantage is its proprietary software, which enables its AI chips to work together quite effectively. As a result, developers are able to easily build programs on Nvidia’s chips, and developers have become accustomed to using its offerings. The company’s software also enables AI applications to run quickly.
Can Nvidia’s Market Capitalization Reach $5 Trillion?
In a note to investors Tuesday, investment bank Rosenblatt predicted that Nvidia’s shares could reach $200. That would put the company’s market capitalization at $5 trillion.
The bank believes that, in the longer term, a significantly higher amount of Nvidia’s sales will be generated from subscriptions to its software. As a result, its revenue will become more predictable, making its shares even more valuable, Rosenblatt contended.
Moreover, the shares certainly do have a great deal of positive momentum at this point.
On the other hand, a number of Nvidia’s competitors and largest customers are developing their own software that could eventually rival Nvidia’s offering. Specifically, these companies, including Meta (NASDAQ:META), Microsoft and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), are trying to improve Triton, which was first introduced by OpenAI in 2021. Triton is designed to work in tandem with many AI chips. AMD (NASDAQ:AMD) and Qualcomm (NASDAQ:QCOM), which compete with Nvidia, are also involved in the project.
Moreover, Meta, Microsoft and Google are also all developing their own AI chips, which could rival those of Nvidia.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
