Nvidia has surpassed Microsoft to become the world’s most valuable company, driven by its high-end processors integral to the race for dominance in artificial intelligence (AI) technology. Nvidia’s stock rose 3.5% to $135.58, pushing its market capitalization to $3.335 trillion, surpassing Apple and Microsoft in recent days.

Microsoft’s market value stood at $3.317 trillion with a slight decrease in its share price, while Apple’s slipped to $3.286 trillion as its stock fell over 1%. Nvidia’s remarkable rise reflects Wall Street’s enthusiasm for AI technology, although some investors express concerns about potential setbacks in AI spending.

Nvidia’s ascendance has not only propelled the S&P 500 and Nasdaq to record highs but also made it the most traded company on Wall Street, averaging $50 billion in daily turnover compared to around $10 billion for Apple, Microsoft, and Tesla. The company’s stock has nearly tripled this year, driven by strong demand for its leading-edge processors amid supply constraints.

Competing tech giants like Microsoft, Meta Platforms, and Alphabet are aggressively expanding their AI capabilities, intensifying demand for Nvidia’s superior AI processors. Despite its stellar performance, analysts caution that any misstep could trigger a significant stock correction.

Tuesday’s gains set a record high for Nvidia’s stock, adding over $110 billion to its market value in a single day, equivalent to Lockheed Martin’s entire market capitalization. Nvidia’s market value surged from $1 trillion to $2 trillion in just nine months and reached $3 trillion in slightly over three months.

Since its optimistic forecast a year ago, Nvidia consistently outperformed Wall Street’s expectations, driven by robust demand for its graphics processors as companies rush to integrate AI applications. Analysts’ bullish outlook on Nvidia’s future earnings has moderated its earnings valuation, which now trades at 44 times expected earnings, down from over 84 a year ago.