Nvidia Just Became the World's Most Valuable Company, Ahead of Apple. Here's What Happens Next.

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Nvidia (NASDAQ: NVDA) has reached many milestones this year, from soaring past $1,000 a share to being invited into the Dow Jones Industrial Average. The latest achievement for the top chipmaker is surpassing Apple to become the world's most valuable company at $3.57 trillion. This already happened once earlier in the year -- but it didn't last.

Will Nvidia stay ahead this time? Demand for Nvidia's artificial intelligence (AI) chips is strong, the general AI market is set to climb from $200 billion to $1 trillion this decade, and Nvidia has a big catalyst right around the corner -- the launch of its new Blackwell architecture. All of that is positive and supports the idea of Nvidia staying on top. That said, Nvidia shares have climbed more than 190% so far this year and 2,700% over the past five years.

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If the stock price stagnates at any point, taking a break after a long string of gains, Apple could easily pull ahead -- especially since growth is far from over at the smartphone giant. Any potential snafu in Nvidia's Blackwell launch also could hold the stock back. Let's take a closer look at the details and consider what may happen next.

An investor cheers in front of a laptop.
Image source: Getty Images.

Fueling key AI tasks

First, a little background on Nvidia's path so far. The company once was most known for selling graphics processing units (GPUs) to power video games, but the ability of these high-performance chips to process many tasks at once made them ideal for other uses, too -- such as driving key AI tasks, like the training and inferencing of models.

With the AI boom, Nvidia took off, selling not only GPUs but a full portfolio of other products and services to customers developing AI projects. Nvidia's earnings surged, and in recent quarters, they've climbed in the triple digits. At the same time, gross margin has widened, passing 70% and showing Nvidia is highly profitable.

The general market has recognized Nvidia's importance in today's economy. The Dow Jones Industrial Average recently invited Nvidia to join, replacing chipmaker Intel in the benchmark index.

As mentioned, Nvidia stock has surged this year, rising so much that the company decided on a 10-for-1 stock split to make it easier for a broader range of investors to buy the stock. A split lowers the price of individual shares by issuing additional shares to current holders but doesn't change the market value or anything fundamental about the company. Since the split in early June, Nvidia shares have continued to march higher, gaining about 20%.