Nvidia reclaims world’s most valuable company title as shares soar to record high; what's behind the rally?

Nvidia Corp reclaimed its title as the world’s most valuable company after its shares surged to a record high on Wednesday, buoyed by growing investor confidence over artificial intelligence (AI) demand.

The chipmaker’s shares climbed over 4% to touch an all-time high of $154.10, pushing its market capitalisation to USD 3.76 trillion.

With the latest rally, Nvidia surpassed Microsoft Corp, which closed with a market value of $3.65 trillion following a modest 0.2% gain.

What's behind the rally?

The rally came after brokerage Loop Capital raised its price target on Nvidia stock to USD 250 from USD 175, while maintaining its ‘buy’ rating on the stock.

Nvidia CEO Jensen Huang's remarks on growth areas for the company also boosted investors' confidence.

Speaking at Nvidia's annual shareholders meeting, Huang said, "We have many growth opportunities across our company, with AI and robotics the two largest, representing a multitrillion-dollar growth opportunity."

He added that autonomous vehicles, which will be the first commercial application of robotics, are a big focus for the company.

"Nvidia Drive platform is powering the transition to software-defined vehicles and providing the immense computational horsepower required for self-driving capabilities," he said.

Despite its soaring stock, Nvidia currently trades at about 30 times projected earnings for the next 12 months, below its five-year average of 40, according to data from LSEG.

Over the past year, Nvidia, Microsoft, and Apple Inc have traded places multiple times as the world’s most valuable listed company.

Microsoft had taken the lead earlier this month after overtaking Nvidia.

Nvidia’s shares have now rebounded more than 60% from their April 4 closing low, which came amid market concerns following tariff-related announcements by US President Donald Trump.

Huang had asserted that export restrictions to China have been a "failure."

"The export control gave them the spirit, the energy, and the government support to accelerate their development. So I think, all in all, the export control is a failure," Huang said last month about Chinese tech companies.

Markets have since recovered on hopes of forthcoming trade agreements to mitigate the impact of the proposed tariffs.