Nvidia shares reach world's most valuable milestone. Where to now?

Nvidia beats out Apple and Microsoft to be number one in the world.

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Nvidia Corp (NASDAQ: NVDA) shares have again made history overnight.

The chip-designing company no longer plays second fiddle to other tech titans, such as Apple Inc (NASDAQ: AAPL) and Microsoft Corp (NASDAQ: MSFT). Rising a further 3.5% to a record US$135.58 per share, Nvidia is now the most valuable company in the world.

While Nvidia has pipped its peers, the lead is narrow. Apple, Microsoft, and Nvidia all hover around the US$3.3 trillion mark. A measly 1.6% gain in Apple shares would put it back in the pole position from the third spot.

AI powerhouse takes the throne

Artificial Intelligence (AI) is the term on everyone's lips this year. Tens of billions of dollars have been spent upgrading data centres worldwide with AI-enabling hardware to meet AI-powered productivity, product optimisation, and performance.

No one has benefitted more from this spending than Nvidia. Recent data suggests the company, led by Jensen Huang, holds a market share of between 70% and 95% in AI chips. A feat that has delivered incredible growth in Nvidia's revenue, profits, and shares in recent years.

For the 12 months ending April 2024, Nvidia recorded revenue of US$79.8 billion and net profits after tax (NPAT) of US$42.6 billion, respectively, an increase of 208% and 789%. Yet, the appetite for AI hardware appears to be as strong as ever.

In the company's first-quarter 2024 earnings call last month, Nvidia chief financial officer Colette Kress said:

Demand for H200 [an accelerated computing graphics processing unit] and Blackwell is well ahead of supply, and we expect demand may exceed supply well into next year.

Such a strong outlook has pushed earnings estimates among analysts for FY25 to around US$63 billion. For context, Apple earned US$100 billion in net profits during its last four quarters, while computer giant Microsoft generated US$86 billion.

However, some investors see Nvidia as the backbone of AI for years to come.

What are analysts saying about Nvidia shares?

Despite being the most expensive company in the US$3 trillion league based on the price-to-earnings (P/E) ratio, several analysts still see blue skies ahead for the green graphics card company.

Rosenblatt, a New York-based broker, remains bullish on Nvidia shares after its newfound number-one status. Last night, the broker upgraded the shares' price target to US$200. The improved target rides on Nvidia obtaining greater market share in high-margin areas with its Blackwell, Rubin, and Hopper lineup.

The beefed-up Nvidia price target suggests an additional 47.5% upside.

However, Oliver Pursche of Wealthspire Advisors warns of what a slipup would entail:

Nvidia has been getting a lot of positive attention and has been doing a lot of things very correctly, but a small misstep is likely to cause a major correction in the stock, and investors should be careful.

Nvidia shares are up 181.5% in 2024 alone.

Motley Fool contributor Mitchell Lawler has positions in Apple. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Nvidia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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