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Is Nvidia About to Overtake Microsoft?

Nvidia (NVDA) and Microsoft (MSFT) are neck-and-neck in the race for the largest publicly traded company in the world. Here’s what it will take for Nvidia to break away.


Wednesday, June 5, was a banner day for Nvidia (NVDA). Not only did it break above 120 for the first time ever (1,200 pre-split), but it also reached a $3 trillion market cap and claimed the title as the second-largest company in the world, beating out Apple (AAPL) and trailing behind only Microsoft (MSFT).

In the weeks since, Nvidia has passed 130 mark (share price) and added hundreds of billions of dollars to its market cap. It also, albeit briefly, usurped Microsoft as the largest publicly traded company in the world by market cap.

Given the pace of recent gains for what is the most important, if not the biggest, company these days, it’s fair to wonder when Nvidia may finally break out to a significant lead and leave Microsoft, and all the others, in the dust.

For context, Nvidia’s rise from a $1 trillion market cap to a $2 trillion market cap took only 180 days, the fastest on record.

That was on March 1. The rise from $2 trillion to $3 trillion took only 97 days.

That is a staggering pace.

Even with the recent dip, Nvidia’s path to reclaiming the title of the most valuable company in the world seems all but inevitable.

At the time of writing, Nvidia is trading with a market cap of $3.217 trillion, compared to Microsoft’s market cap of $3.313 trillion, a gap of only $96 billion, or 3%.

It would take only a single strong day from Nvidia (or a particularly weak day from Microsoft) for Nvidia to reclaim the title.

Given that any market conditions that support NVDA continuing to run towards all-time highs would also favor MSFT, it’s fair to suppose that NVDA will actually need to outpace MSFT a bit further than that 3%.

Thus far in 2024, MSFT has returned 20.2%.

NVDA, on the other hand, has returned a staggering 171.5%, more than eight times MSFT’s returns.

To put that into perspective, at the time of writing, we’ve put 118 of this year’s 252 trading days behind us and NVDA has returned an average of 1.45% per day.

In other words, while the two companies may be jockeying for position on a day-to-day basis, Nvidia clearly has momentum on its side.

At that pace, an average trading week is about all that stands between NVDA and the lead.

Will it happen? As we’re fond of saying at Cabot, I don’t know, my crystal ball is in the shop. But I wouldn’t bet against it.

At the same time, in a conversation with my colleague and co-host Chris Preston on a recent episode of our Cabot Street Check podcast, we discussed Nvidia’s valuation and are both in the “hold” camp.

Nvidia’s performance over the last few years has been unprecedented. We’re talking about a trillion-dollar company that doubled its market cap in six months and added another trillion in roughly the next three.

Betting against Nvidia these days seems to be nothing short of a fool’s errand, but the returns would have to stay unprecedented going forward to justify opening a new position given the run it’s had.

So if you’re holding NVDA shares, enjoy the ride. If not, take solace in the fact that if you own ETFs or mutual funds in your 401(k), you already have some exposure to NVDA, probably just not as much as you’d want in hindsight.

Brad Simmerman is the Editor of Cabot Wealth Daily, the award-winning free daily advisory.