Nvidia dethrones Microsoft as world's most valuable company again, adds $1 trillion in market cap in 2 months

Nvidia Corporation on June 3, 2025, surpassed Microsoft to become the world’s most valuable publicly traded company yet again , with its market capitalization crossing $3.45 trillion. Nvidia now accounts for an estimated 80% share of the global AI accelerator market. Its market cap has grown by more than $1.2 trillion in the past six months alone, fueled by a wave of enterprise AI adoption and multi-year supply agreements with major cloud providers. 

As of June 4, Nasdaq data showed Nvidia’s market cap at $3.44 trillion, slightly ahead of Microsoft’s $3.40 trillion value. This ascent followed a period of significant market turbulence earlier in 2025. Let’s take a deep dive to explore the key factors powering Nvidia’s dominance, from segment-level performance to competitive positioning.

What is Market Value?

Market value, or market capitalization, is the total value of a publicly traded company as determined by the stock market. It’s calculated by multiplying the current share price by the total number of outstanding shares. For example, if a company has 100 crore shares and each share is trading at ₹200, the company’s market capitalization is ₹20,000 crore.

Think of it like splitting a cricket team into 100 tiny ownership tokens, and each token is being traded among fans based on how well the team is performing. If fans are willing to pay ₹200 for one token today, the total value of the team (100 tokens × ₹200) becomes ₹20,000. Now, if the team wins a major tournament, its prospects look much better, and each token is suddenly valued at ₹300. 

The total value jumps to ₹30,000, even though the core team hasn't changed overnight, the expectation of its future success has. This is how the stock market works: market value reflects what people are collectively willing to pay for a slice of the company, based on its current performance, future expectations, and overall sentiment.

The Trillion-Dollar Test: Navigating Market Headwinds to Emerge Stronger

The path to global market leadership in 2025 again was not a straight line for Nvidia. After a phase of unprecedented growth, Nvidia's market valuation faced a notable test in April 2025. From a peak exceeding $3.6 trillion in January, its market cap saw a significant dip to around the $2.3 trillion mark in a response to a complex interplay of global economic signals:

• Global Trade Uncertainties: Increased discussions around international tariffs and potential new restrictions on advanced technology exports, particularly concerning key markets like China, created a cautious sentiment among global investors.
• Market Reassessment: Following a period of extraordinary expansion in AI-related valuations, a natural market recalibration occurred as investors paused to evaluate long-term growth trajectories.
• Questions on AI Investment Pace: Some market observers began to question if the blistering pace of global AI infrastructure spending could be maintained indefinitely.
• Specific Regulatory Impacts: The U.S. authorities' decision to require new licenses for the sale of certain Nvidia chip lines, such as the H20, into China directly influenced near-term revenue expectations and investor outlook.

Yet, what followed was a powerful demonstration of market belief in Nvidia's fundamental strength and long-term vision. Within two months, the company added around a trillion dollars to its valuation, according to CompaniesMarketCap. This rapid and robust rebound underscores that global demand for Nvidia's core technology remains exceptionally strong.

The Engines of Nvidia's Growth

Nvidia's sustained dominance and its ability to command such a significant global valuation are not accidental. They are built on clear strategic advantages and an unparalleled understanding of the AI landscape:

1. The Data Center: Nvidia's Data Center division is the undisputed engine of its financial performance and market leadership. In Q1 FY26, this segment reported revenues of an astounding $39.1 billion, a 73% surge year-over-year. This growth is a direct reflection of the global rush by enterprises, research institutions, and cloud service providers to build out the infrastructure necessary for advanced AI, a trend that shows no signs of slowing.

2. Blackwell: The introduction and rapid adoption of Nvidia's next-generation Blackwell architecture are already supercharging its growth narrative. Nvidia CEO Jen-Hsun Huang has characterized the demand for Blackwell as "insane." The company confirmed that Blackwell was in full production and had already generated "billions of dollars in sales in its first quarter" of availability (Q4 FY25). 

By Q1 FY26, Blackwell was already contributing nearly 70% of data center compute revenue. This platform is not just an incremental improvement; it's a step-change in AI processing power, crucial for the increasingly complex models that will define the next wave of AI applications. For nations and companies looking to build "Sovereign AI" capabilities – a concept gaining traction globally, including in India – such powerful infrastructure is paramount.

3. Global AI Adoption: Jen-Hsun Huang has highlighted that "Global demand for NVIDIA's AI infrastructure is incredibly strong," with nations worldwide viewing AI as "essential infrastructure — just like electricity and the internet." His projection that data center spending could hit $1 trillion by 2028, with a significant share for AI, paints a picture of a vast and expanding addressable market.

4. The CUDA Ecosystem: Beyond the silicon, Nvidia's Compute Unified Device Architecture (CUDA) software platform is a critical differentiator. With an estimated 92-98% share of the data center GPU market and a thriving ecosystem of over 4 million developers, CUDA creates immense switching costs for customers. 

5. Financial Strength and Forward Momentum: Nvidia's financial results underscore its market leadership and operational excellence. The Q1 FY26 figures, even with specific charges, were remarkable:

Sources: Nvidia Q1 FY26 Earnings Report.

The $4.5 billion charge in Q1 FY26 related to H20 export restrictions to China, while impacting reported net income and gross margins for the quarter, is a specific event. The underlying business momentum, reflected in the non-GAAP gross margin of 71.3% and the company's aim for mid-70% margins, remains exceptionally strong.

Nvidia’s grey cloud: Global Landscape

While Nvidia's position is formidable, any global technology leader faces a dynamic environment with inherent risks:

Geopolitical Headwinds & Export Controls: The restrictions on advanced AI chip exports to China are a significant factor. Nvidia recorded a $4.5 billion charge in Q1 FY26 due to H20 excess inventory and anticipates an $8 billion loss in H20 revenue in Q2 FY26. Huang's comment that the $50 billion market in China for AI chips is effectively closed to U.S. industry" highlights the scale of this challenge. This underscores the importance of geopolitical stability for global tech supply chains.

• The Rise of Competition: The AI chip market's immense potential is attracting significant investment from competitors, including established players like AMD and Intel, and major cloud providers developing in-house solutions. This competitive pressure is a natural evolution in any high-growth tech sector.
• Sustaining Growth and Margins: Maintaining the current pace of growth and high-profit margins will be a key challenge as the market matures.
• Customer Concentration: A large portion of Nvidia's revenue comes from a few large hyperscale customers. Diversifying this base will be important for long-term stability.
• Global Regulatory Environment: As a dominant player, Nvidia will continue to navigate evolving regulatory landscapes worldwide.

The Road Ahead For Nvidia

Nvidia’s rise to the top reflects its central role in the AI boom. With AI expected to add over $15 trillion to the global economy by 2030, Nvidia holds a dominant 80%+ share in AI data center chips. Despite growing competition, its strong track record and market position make it a key player in one of the century’s biggest tech shifts.

Disclaimer:

The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing.  Past performance is not indicative of future returns. The securities are quoted as an example and not as a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument. The Company strongly encourages its users/viewers to conduct their own research, and consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to an exchange investor redressal forum or arbitration mechanism. Registered office address: Office No. 507, 5th Floor, Pragya II, Block 15-C1, Zone-1, Road No. 11, Processing Area, GIFT SEZ, GIFT City, Gandhinagar – 382355. IFSCA Broker-Dealer Registration No. IFSC/BD/2023-24/0016, IFSCA DP Reg No: IFSC/DP/2023-24/010.