Which AI heavyweight will hit $4 trillion first?
The race to become the first $4 trillion company is on.
Artificial-intelligence heavyweights Microsoft and Nvidia continue to battle to be the world’s most valuable company by market capitalization, after surpassing the $3 trillion milestone last year.
Twice this month, Microsoft unseated Nvidia as the most valuable company, but Nvidia regained its title Wednesday. On Thursday, its shares clinched a four-day winning streak and record close of $155.02. That put Nvidia’s market value at $3.782 trillion, ahead of Microsoft’s $3.697 trillion.
Now, it’s just a matter of who gets to $4 trillion first. Wedbush analysts say we will find out soon enough.
“We believe both Nvidia and Microsoft will hit the $4 trillion market cap club this summer and then over the next 18 months the focus will be on the $5 trillion club,” the analysts wrote in a research note Friday.
They characterize Nvidia and Microsoft as the so-called poster children of the AI revolution, which they say “represents the biggest tech transformation in over 40 years.”
After all, Nvidia’s momentous ascent has been the stuff of dreams for AI fans. Interest in AI reached new heights when ChatGPT launched in late 2022, and Nvidia’s powerful graphics processing units emerged as a solution to power the technology. Today, Nvidia is widely regarded as the chip maker of choice for hyperscalers, Microsoft included.
Nvidia stands at the forefront, “as they are the only game in town with their chips the new gold and oil.” The company’s dominance allows CEO Jensen Huang to have “the best perch and vantage point to discuss overall enterprise AI demand,” the analysts contended.
Microsoft’s AI story has been equally compelling for bulls. The company once known for the Windows operating system and Microsoft Office suite has rebranded itself into an AI enterprise—if the language in its latest earnings report is any indication. Azure, Microsoft’s flagship cloud computing platform, offers a suite of tools that allow developers to build and deploy AI applications.
Its footing in the cloud computing space, alongside other hyperscalers like Alphabet, is a key advantage: The need for cloud compute is only expected to grow as the adoption of AI, a power-intensive technology, ramps up.
As more AI use cases are identified, the Wedbush team expects Amazon Web Services and Google Cloud Platform to “acquire AI-capable chips, build AI-capable service offerings, and sell those services into their respective installed bases.”
Nvidia stock rose 1.3% to $157.11 on Friday. Wedbush maintains an Outperform rating and $175 price target on the shares.
Microsoft was flat at $497.67. The firm rates Microsoft at Outperform with a $600 target price.
Wedbush Fund Advisers launched the Dan IVES Wedbush AI Revolution ETF earlier this month, which includes Microsoft, Nvidia, and the other Magnificent Seven tech stocks.
