By Zaheer Kachwala
(Reuters) - Nvidia (NASDAQ:NVDA)'s shares rallied around 6% to hit a record high on Tuesday, leaving the AI chipmaker's stock market value about $100 billion away from overtaking Apple (NASDAQ:AAPL) in a major reshuffle of Wall street's biggest players.
Last trading at $1,128, Nvidia's market capitalization reached $2.8 trillion, compared to a market value of $2.9 trillion for Apple, which is Wall Street's second-most valuable company after Microsoft (NASDAQ:MSFT).
Its stock surged as much as 8% to $1,149.39 during the session, an intra-day record high. Apple's stock was down 0.2% in afternoon trading.
Nvidia's shares have surged nearly 13% since it forecast second-quarter revenue above Wall Street expectations last week and announced a stock split, which excited investors as they continue to bet on the AI poster child.
"The market has been struggling to keep up with the company's ever improving growth trajectory. At a mid-thirties forward earnings multiple, this still doesn't feel like bubble territory," said Derren Nathan, head of equity analysis at Hargreaves Lansdown (LON:HRGV).
Nvidia recently traded at 36 times its forward profit estimates, compared with 38 for Advanced Micro Devices (NASDAQ:AMD) and 21 for Intel (NASDAQ:INTC), according to LSEG data.
The company's shares have more than doubled so far this year after more than tripling last year.
Nvidia, which has been one of the biggest beneficiaries of the AI boom, reported a five-fold jump in revenue at its data center segment last week as customers line up for their high-performance chips.
Alphabet (NASDAQ:GOOGL), Microsoft, Amazon.com (NASDAQ:AMZN) and other technology companies have been competing for a limited supply of Nvidia's high-end chips as they race to dominate AI computing.
"Business is doing incredibly well, there are so many opportunities to keep growing, and the AI theme still has legs. When the song is that catchy, investors want to keep humming it all day long, said Dan Coatsworth, investment analyst at AJ Bell when asked about the stock's rally.
Long considered a must-own stock on Wall Street, Apple has underperformed other Big Tech companies in recent months, falling around 2% this year as it struggles with weak iPhone demand and tough competition in China.
Microsoft overtook Apple as the world's most valuable company earlier this year as it raced ahead of other tech firms due to gains made by early investments in artificial intelligence across its cloud services.
Microsoft's shares were down 0.4% on Tuesday, giving it a market value of $3.1 trillion.
Apple has also been slower in rolling out generative AI, which can generate human-like responses to written prompts, than rivals such as Microsoft and Google, which are weaving them into products.