Chip-making specialist Nvidia briefly became the world’s most valuable company after its share price hit an all-time high last week.
The stock price hit a high of $136, making the company worth a total of $3.34tn (£2.63tn).
This took Nvidia ahead of Microsoft, while it had already overtaken Apple earlier this month.
However, the company’s stock price slightly fell later last week to around $3.22tn, with Microsoft reclaiming the top spot at more than $3.3tn.
Nvidia’s stock has nearly doubled in price since the start of this year alone, and just eight years ago it was worth less than 1% of its current value.
The company had previously based much of its value on graphics cards, which only faced serious competition from fellow California-based rival AMD.
Nvidia’s development of the graphics processor unit (GPU) at the turn of the century had redefined computer graphics and helped fuel a boom in the PC gaming market.
It enjoyed a boost from a rush to mine cryptocurrency Bitcoin in 2020 – a process making use of the GPUs mostly made by Nvidia and AMD.
In more recent years, however, it has been the emergence of artificial intelligence (AI) and the resources needed to train and run AI systems that has seen the company surge to new heights.
Nvidia chips at the centre of the surge in AI
Daniel Newman, CEO of technology research company The Futurum Group, said that Nvidia essentially created a market that didn’t exist, with its GPUs going from gaming and graphics rendering to working with data for AI and machine learning.
General purpose chips can still be used for relatively less demanding AI tasks, but specialised AI chips are increasingly being used as the technology continues to advance.
These purpose-built chips can perform AI-related tasks quicker and more efficiently than their predecessors, and most of the current leaders in AI are powering their systems with these Nvidia chips.
The scale of the recent success might seem sudden, but it’s actually the pay-off from a long-term strategy going back more than two decades.
Chirag Dekate, a VP analyst at research and consultancy firm Gartner, said that the company “both identified and nurtured” an adjacent market where the technology being used for graphics could be adapted for “parallel tasks”.
Some have suggested that Nvidia’s current market share will be hard to maintain, but analysts Wedbush Securities predicts that the race to the first $4tn tech firm valuation will involve Nvidia, Apple and Microsoft.
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