In 2 months, over $1 trillion increase, NVIDIA returns to the "most valuable company" throne

The AI frenzy is still not cooling down! NVIDIA's market value surpasses Microsoft, once again crowned as the world's most valuable company.

Amid threats from Trump's trade policies and increased market volatility, on Tuesday, NVIDIA's stock price rose about 3% to $141.22, with a market value reaching $3.45 trillion, surpassing Microsoft's $3.44 trillion, reclaiming the title of the world's highest market value company for the first time since January.

This means NVIDIA's market value has rebounded by $1 trillion in two months. Since June last year, NVIDIA has been alternating with Apple and Microsoft at the top of the market value rankings, with its last peak occurring on January 24 this year.

NVIDIA's strong performance has also boosted the entire chip sector. Broadcom rose 3%, Micron Technology rose 4%, and the VanEck Semiconductor ETF, which tracks a basket of chip stocks, rose 2%.

Despite tariff concerns, NVIDIA's stock price has surged nearly 24% in the past month, rising over 45% since the April low, demonstrating the market's continued confidence in its core business and growth prospects.

Thomas Martin, Senior Portfolio Manager at Globalt Investments, stated:

“The questions about NVIDIA have been positively answered, and now is the time to increase holdings.”

Impressive Financial Report: No Signs of Slowing Growth Engine

Last week, NVIDIA released a stunning financial report: In the first fiscal quarter, adjusted earnings per share were $0.96, with sales of $44.06 billion, a year-on-year increase of 69%.

For a company of such scale, this growth rate is almost unbelievable.

This performance effectively alleviated several major concerns among investors: whether export restrictions would undermine NVIDIA's rapid revenue growth, the outlook for AI spending, and the company's ability to expand the supply of its latest Blackwell chips.

Valuation Advantage: Still Below Other Tech Giants

Despite the significant rise in stock price, NVIDIA's current expected price-to-earnings ratio is about 29 times (based on expected earnings for the next 12 months), far below the average of 34 times over the past decade.

In comparison, the NASDAQ 100 index has a price-to-earnings ratio of 26 times, while analysts predict that NVIDIA's revenue growth this year will far exceed the average of NASDAQ 100 constituents.

According to Bloomberg, the company's PEG ratio (a measure of valuation relative to growth) is below 0.9, significantly lower than other members of the Magnificent 7.

AI Capital Expenditures Continue to Surge: Demand Not Peaking

Currently, Microsoft, Meta, Alphabet, and Amazon contribute over 40% of NVIDIA's revenue, as they continue to make large-scale investments in AI infrastructure According to the average estimates compiled by Bloomberg analysts, the capital expenditures of these four companies are expected to reach approximately $330 billion by 2026, a 6% increase from this year's estimated expenditures. The head of Amazon Web Services reiterated last Friday the company's plans for aggressive expansion of data centers.

Samuel Rines, a macro strategist at WisdomTree, stated:

“We have not seen any form of AI spending slowdown, as long as capital expenditures continue to grow, NVIDIA's valuation is unlikely to compress significantly.”

Institutional Holdings Low: Potential Buying Pressure Still Awaiting

Despite Wall Street's general optimism towards NVIDIA, according to data released by Bank of America last Friday, only 74% of long-held funds own NVIDIA stock, lower than Amazon, Apple, and Microsoft (with Microsoft being the most popular at a holding rate of 91%).

Angelo Zino, a senior equity analyst at CFRA Research, pointed out:

“Many investors exited this market too early, and now they are being forced to return to it.”

Zino believes that the relatively low exposure combined with the demand for more computing infrastructure could drive NVIDIA's stock price higher through 2026