Nvidia vs Microsoft: AI Giants Race to $4 Trillion

The race to become the first $4 trillion company is heating up. Artificial intelligence (AI) heavyweights Microsoft and Nvidia are in a neck-and-neck competition to claim the title of the world's most valuable company by market capitalization. Both companies surpassed the $3 trillion milestone last year, and the competition has only intensified.

Twice this month, Microsoft unseated Nvidia as the most valuable company, but Nvidia regained its title Wednesday. On Thursday, its shares clinched a four-day winning streak and closed at a record high of $155.02. Nvidia’s market value now stands at $3.782 trillion, slightly ahead of Microsoft’s $3.697 trillion.

The question on everyone's mind is: Who will hit $4 trillion first? Wedbush analysts predict that we will find out soon. “We believe both Nvidia and Microsoft will hit the $4 trillion market cap club this summer and then over the next 18 months the focus will be on the $5 trillion club,” they wrote in a research note.

Nvidia and Microsoft are seen as the poster children of the AI revolution, which represents the biggest tech transformation in over 40 years. Nvidia’s rise has been fueled by the growing demand for powerful graphics processing units (GPUs) to power AI technologies. When ChatGPT launched in late 2022, interest in AI surged, and Nvidia’s GPUs emerged as the go-to solution.

Nvidia CEO Jensen Huang’s vantage point allows him to provide valuable insights into overall enterprise AI demand. “Nvidia stands at the forefront, as they are the only game in town with their chips the new gold and oil,” Wedbush analysts noted.

Microsoft’s AI story is equally compelling. The company, once known for the Windows operating system and Microsoft Office, has rebranded itself as an AI enterprise. Azure, Microsoft’s flagship cloud computing platform, offers a suite of tools for developers to build and deploy AI applications. Its strong footing in the cloud computing space, alongside other hyperscalers like Alphabet, is a key advantage as the adoption of AI ramps up.

As more AI use cases are identified, the Wedbush team expects Amazon Web Services and Google Cloud Platform to “acquire AI-capable chips, build AI-capable service offerings, and sell those services into their respective installed bases.”

Nvidia stock rose 1.3% to $157.11 on Friday. Wedbush maintains an Outperform rating and $175 price target on the shares. Microsoft was flat at $497.67, and the firm rates Microsoft at Outperform with a $600 target price.

Wedbush Fund Advisers recently launched the Dan Ives Wedbush AI Revolution ETF, which includes Microsoft, Nvidia, and the other Magnificent Seven tech stocks.

The AI revolution is far from over, and both Nvidia and Microsoft are well-positioned to lead the charge. The next few months will be crucial in determining which company will be the first to hit the $4 trillion mark.