Nvidia, a leading chipmaker, has surpassed Microsoft to become the world's most valuable public company. This significant milestone was achieved after Nvidia's shares surged by over 3.5%, boosting its market capitalization to a staggering $3.34 trillion. Microsoft, which had briefly taken the second spot, now trails behind with a market cap of $3.32 trillion, while Apple lags behind with $3.28 trillion.

Nvidia's remarkable rise is largely attributed to the growing demand for its processors, which are crucial for powering AI models. The company's shares have skyrocketed since last year, with a year-to-date gain of 180%. This is in contrast to Microsoft's 20% gain, which was fueled by its early investment in AI through OpenAI.

The surge in Nvidia's stock also coincides with the announcement of its partnership with Hewlett Packard Enterprise (HPE) to develop products that accelerate the adoption of generative AI. This collaboration, known as Nvidia AI Computing by HPE, aims to equip enterprise clients and AI professionals with the most advanced computing infrastructure and services to expand the frontier of AI.

Nvidia's processors have become highly sought after in the AI industry, particularly for running large language models, the technology behind chatbots like ChatGPT. The company's powerful A100 GPU, which costs $15,000 each, has been used by Microsoft to power advanced LLMs for its cloud customers.

Analysts predict that this demand will continue to drive Nvidia's earnings going forward. The company's record fourth-quarter results in February marked a significant milestone, with Nvidia becoming the first chipmaker to hit a $2 trillion market capitalization. In May, Nvidia reported a 260% increase in first-quarter revenue for the fiscal year 2025, exceeding Wall Street analysts' expectations.

"Demand is showing no signs of switching off," said Ben Barringer, technology analyst at Quilter Cheviot, highlighting the company's strong financial performance. Nvidia's rise to the top is a testament to its dominance in the AI sector, and its continued growth is expected to fuel further innovation in the industry.