Nvidia stock pulls back after topping $3 trillion market cap mark

Nvidia stock (NVDA) retreated in early trading on Thursday, after a rip-roaring rally sent the company past a $3 trillion market cap for the first time.

Nvidia's stock price opened at $1,240.09 per share before dipping around 0.4% in early morning trading.

Wednesday's move pushed the chip giant past Apple, making it the second-most-valuable company on the US stock market before the early retreat. Microsoft (MSFT) currently holds the top spot.

The rally came amid a broader gain in tech stocks, with softer US economic data and a decline in Treasury yields boosting markets on hopes the Federal Reserve may cut rates as early as July.

Nvidia has been the poster child for investor enthusiasm in artificial intelligence, which accelerated with OpenAI's release of ChatGPT in late 2022.

The stock is up over 140% this year and 200% over the last year; Nvidia shares have gained more than 3,300% in the last five years. Over those same periods, the Nasdaq has gained a more modest 14%, 29%, and 126%, respectively.

This week's rally in Nvidia follows an announcement on Sunday from its CEO, Jensen Huang, who said at an industry conference that the company will release a high-powered version of its Blackwell chip — called the Blackwell Ultra — in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will debut an Ultra version of Rubin in 2027.

Nvidia is the tech industry's go-to supplier for AI chips and integrated software.

Tech behemoths, including Amazon (AMZN), Google (GOOG), Meta (META), Microsoft, Tesla (TSLA), and others, use its hardware to power everything from their cloud-based AI offerings for customers to their own AI models and services.

In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, jumps of 461% and 262%, respectively, from the same period a year ago.

Nvidia's Data Center revenue in the most recent quarter increased 427% year over year to $22.6 billion, accounting for 86% of the company's total revenue for the quarter. Nvidia's gaming segment, which was previously its most important business, saw revenue of $2.6 billion.

Nvidia also announced that its stock would undergo a 10-for-1 split on June 7 and the company will raise its dividend from $0.04 per share to $0.10 per share.

But Nvidia isn't the only game in town.

AMD (AMD) and Intel (INTC) are pushing forward with their own AI chips with the goal of outmaneuvering Nvidia. AMD recently announced its MI325X and MI350 will hit the market in 2024 and 2025, respectively, and said its next-generation MI400 AI accelerator platform will land in 2026.

Intel, meanwhile, said its Gaudi 2 and Gaudi 3 AI accelerators will undercut competing chips on price. And with companies spending billions on AI chips, any price savings will certainly be welcome.

Nvidia is also contending with growing competition from its own customers as Amazon, Google, and Microsoft seek to wean themselves off of their dependence on the company's chips and save on capital expenditures while they're at it.

For now, though, Nvidia continues to maintain its grip on the AI space, and it will do so for the foreseeable future.

Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.

Click here for the latest technology news that will impact the stock market.

Read the latest financial and business news from Yahoo Finance