Microsoft (MSFT) has surpassed Nvidia (NVDA) in terms of its market capitalization to become the world's second-most valuable publicly traded ?company.
On Nov. 10, MSFT stock finished trading at $533.16 U.S. per share, giving the company a market value of $3.96 trillion U.S.
That put the Seattle-based technology giant slightly ahead of Nvidia whose market capitalization sunk below $4 trillion U.S. amid a broad-based selloff in its shares.
As recently as the summer, Nvidia had been the world’s most valuable publicly traded company and it was the first company to achieve a $5 trillion U.S. market cap.
However, NVDA stock has plunged 25% in the past month, including a 17% decline over the last week, after it was reported CEO Jensen Huang had an affair with a Chinese spy.
Nvidia’s stock has also been sinking in recent weeks as fears about the sustainability of the artificial intelligence (A.I.) buildout grip markets.
Consequently, Microsoft has overtaken Nvidia to become the world’s second most valuable company. Apple (AAPL) sits above Microsoft and Nvidia with a $5.06 trillion U.S. market cap.
The recent decline in Nvidia’s share price has pushed the company’s valuation to a 15-year low.
NVDA stock is currently trading at just 11.77 times expected earnings over the next 12 months. That means investors are paying less than $12 U.S. for every $1 U.S. of anticipated profit.
That’s the lowest valuation for Nvidia stock since 2011, according to data from FactSet (FDS). By comparison, the S&P 500 index as a whole is trading at 18 times expected earnings.
Some analysts say Nvidia’s stock is currently a bargain given its rapid growth and lead role in the A.I. buildout. The company next reports quarterly financial results on Nov. 17.
Other analysts urge caution with Nvidia’s stock, saying there is a lot of uncertainty about Jensen Huang’s future leading the company that he co-founded in 1993.
For Microsoft, overtaking Nvidia’s market cap represents a big reversal for the software giant. Earlier this year, MSFT stock was down sharply over concerns A.I. would disrupt its business.
However, Microsoft’s stock has come roaring back in recent months following strong financial results from the company. MSFT stock is now up 13% on the year.
Nvidia’s stock, by comparison, is down 11% year-to-date and currently trading at $168.80 U.S. per share.
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