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Nvidia Surpasses Apple to Become World’s Most Valuable Company Amid AI Chip Demand Surge

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Nvidia briefly overtook Apple as the world’s most valuable company on Friday, fueled by a record-setting rally in its stock, largely driven by demand for its AI-focused chips. Nvidia’s market value briefly hit $3.53 trillion, slightly outpacing Apple’s $3.52 trillion before settling near Apple’s valuation. This is the second time this year that Nvidia has reached the top spot, previously contending with Apple and Microsoft for global market cap dominance.

The Silicon Valley chip giant’s stock has surged about 18% in October alone, spurred in part by OpenAI’s recent $6.6 billion funding announcement, which renewed optimism for AI technology. Nvidia, originally known for gaming processors, is now the preferred supplier of AI chips in a market led by Microsoft, Alphabet, Meta, and other tech titans. This week, further gains were prompted by Western Digital’s strong quarterly performance, indicating strong demand from data centers.

Amid these successes, Apple faces lukewarm iPhone sales, with a slight dip in China as Huawei’s sales grew 42%. Apple’s Q3 revenue is projected to rise 5.5% year over year to $94.5 billion, compared to Nvidia’s anticipated 82% jump to $32.9 billion, reflecting the rapid growth in AI adoption. Nvidia’s shares, now 190% higher this year, have gained significant traction in the options market, with bullish investors banking on sustained AI demand.

Nvidia CEO Highlights Need for Affordable Computing to Drive ‘Reasoning’ AI

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Nvidia CEO Jensen Huang has outlined a vision for the future of Artificial Intelligence (AI), where AI systems will be capable of “reasoning” rather than simply responding to inputs. Speaking during a podcast with Arm Holdings CEO Rene Haas, Huang emphasized that achieving this advanced level of AI will depend on making computing more affordable. Current AI tools, like OpenAI’s ChatGPT, which Huang personally uses daily, are powerful but still limited in their ability to carry out complex reasoning processes. To reach the next stage, AI will need to be able to analyze queries through hundreds or even thousands of steps, reflecting on its conclusions.

This capability would represent a significant leap forward from current AI models, which are highly efficient at generating responses but lack the depth of self-reflection and reasoning. Huang explained that future AI systems will differ by being able to process and interpret information with a much greater degree of complexity. This new form of AI will be more dynamic, capable of reasoning through multiple scenarios before arriving at conclusions, making it more adaptive and intelligent.

To make this vision a reality, Nvidia plans to continue enhancing its hardware capabilities. Huang stated that Nvidia will increase the performance of its chips by two to three times annually, while keeping the cost and energy consumption at current levels. This continuous improvement in chip technology is essential to lowering the cost of computing and making advanced AI systems more accessible. Huang believes that this will lay the foundation for AI models capable of handling inference, or the ability to spot patterns and draw conclusions, at a much more sophisticated level.

The transition to reasoning AI will be transformative, reshaping how AI systems operate and interact with the world. However, Huang noted that this leap will only be possible once the infrastructure required to support such advanced computation becomes affordable. With Nvidia at the forefront of this technological advancement, the company is positioning itself to play a pivotal role in making reasoning AI a mainstream reality.

TSMC Reports 54% Profit Surge Amid AI Boom, Beating Expectations

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Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, announced on Thursday a significant 54% increase in net profit for the third quarter, largely driven by rising demand for AI-related applications. The company posted a net income of 352.3 billion Taiwanese dollars (approximately $10.1 billion) for the July-September period, surpassing an estimated 300.2 billion Taiwanese dollars, according to LSEG data.

TSMC, which counts major technology companies such as Apple and Nvidia among its clients, saw its net revenue climb to $23.5 billion in the third quarter, marking a 36% year-on-year increase. The company’s gross margin also improved, rising to 57.8%, compared to 54.3% in the same period the previous year.

“Our business was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” TSMC stated, reflecting the growing global reliance on advanced semiconductors for AI and mobile applications.

In addition to its impressive profit, TSMC’s shares, listed on the Taipei Stock Exchange, have surged nearly 75% year-to-date, highlighting strong investor confidence in the company’s future growth prospects amid the AI-driven semiconductor boom.

Capital expenditure for TSMC edged slightly higher during the third quarter, reaching $6.4 billion, up from $6.36 billion in the previous three months. This increase reflects the company’s ongoing efforts to expand its production capabilities, especially to meet rising demand from the U.S. market.

In line with its global expansion strategy, TSMC is investing $40 billion to construct two chip plants in Arizona, part of its broader commitment to meet U.S. semiconductor needs. Additionally, the company opened its first manufacturing facility in Japan earlier this year.

TSMC’s positive results contrast with recent news from ASML, a key supplier of chip-making equipment to TSMC, which issued a lower-than-expected sales forecast, sending its shares down. Despite such concerns, the AI boom continues to fuel optimism, though some market watchers question the long-term sustainability of this growth. Notably, Foxconn’s CEO, Young Liu, commented last week that the AI frenzy “still has some time to go,” suggesting that advancements in AI models will continue to drive the demand for cutting-edge semiconductors.