Nvidia back to challenge Apple as world's most-valuable company; analysts see 'Prisoner's Dilemma' of IT companies behind the rally

Nvidia's stock continued its upward trajectory, reaching near-record highs on Monday. This surge positions the AI chipmaker to potentially overtake Apple as the world's most valuable company. Nvidia has been the biggest beneficiary of the AI boom, as companies including Meta, Google, Microsoft and Oracle continue to unveil technologies and products that require hige investments in its graphics processing units, or GPUs.
Following a brief and sudden dip in late August and early September, Nvidia share has rebounded sharply. Investors are betting on strong demand for Nvidia's upcoming Blackwell AI processors. The company's shares climbed 2.8% to $138.57, just shy of the all-time high of $140.76 reached in June.

Nvidia's market capitalization now stands at $3.4 trillion, trailing Apple's $3.5 trillion but surpassing Microsoft's $3.1 trillion. This rapid growth is fueled by the intense competition among tech giants like Alphabet, Microsoft, and Amazon to dominate the emerging AI landscape.
Analysts at TD Cowen told news agency Reuters that these companies are caught in a "Prisoner's Dilemma," where the fear of falling behind drives continued investment in AI. They reiterated their "Top Pick" rating for Nvidia, with a price target of $165.
As investors anticipate quarterly earnings reports, Apple and Microsoft also saw gains. Taiwan Semiconductor Manufacturing Co, Nvidia's key manufacturing partner, is expected to report a significant increase in quarterly profits due to strong AI demand.
While Nvidia's success has lifted the broader market, there are concerns about a potential slowdown in AI spending that could dampen investor enthusiasm.