Chip maker Nvidia has become the world’s most valuable company, beating out Microsoft as its microchips and processors continue to spearhead the global AI race.

Nvidia’s shares increased 3.5% to $135.58 on the stock market, raising its market capitalisation to £3.335 trillion. This follows just days after it beat tech giant Apple as the second most valuable company.

The trio’s shares are tight: Apple’s stock decreased by 1% to $3.286, and Microsoft, which is now the second most valuable company in the world, saw a dip of 0.45%, with a valuation of $3.317 trillion.

What’s put Nvidia, the American chip maker, at the top? Artificial intelligence, and its accompanying frenzy, have turned the chip maker into an indispensable centre of technological futures.

While it has its competitors, Nvidia is the main chip maker in the AI space, with its products powering OpenAI’s wildly successful LLMs, including ChatGPT.

As tech giants compete to offer the best in AI as we know it – Apple most notably just entered the race, rather late – Nvidia continues to benefit as companies vie for the AI-capable processors.

This fierce competition, and Nvidia’s market dominance, has seen its stock surge about 180% just this year. Microsoft, on the other hand, saw its shares grow about 19% in the same time span.

On Tuesday, the chip maker’s shares reached a record high of $103bn, and demand for the stock only increased as Nvidia decided to split its stock 10-for-one.

This reduced the price per share, making the highly-valuable stock more affordable to individual investors.

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Nvidia is also now the most traded company on Wall Street, seeing an average daily turnover of $50bn. Apple and Microsoft see about $10bn each, for reference, according to LSEG.

The move to split shares likely contributed to the chip maker now accounting for 16% of all trading in S&P 500 companies.

Demand for its products have also seen prices surge: the price per unit for an AI-capable chip from Nvidia is about $30,000 (£2,3567). The chip maker has reportedly struggled to meet this demand, which could cause companies to turn to alternative chip makers.

However, this appears to not have dampened Nvidia’s market appeal.