By Lewis Krauskopf

NEW YORK (Reuters) – Nvidia (NASDAQ:) has become the world’s most valuable company following a staggering rally in its shares, underlining the outsized role investors expect artificial intelligence to play in the global economy over coming years.

Nvidia shares rose about 3% on Tuesday, giving it a market value of about $3.33 trillion. That pushed the semiconductor bellwether past Microsoft (NASDAQ:) and Apple (NASDAQ:), which had been jostling for the top spots in recent days.

The surge in Nvidia’s market value has been driven by demand for its chips, which are the gold standard in the AI space. The company’s shares are up more than 170% this year and have risen about 1,100% since their October 2022 low.

Blockbuster earnings and broadening investor enthusiasm over AI are supercharging Nvidia’s rally. That fervor has been reflected in Nvidia’s market value, which took only 96 days to go from $2 trillion to $3 trillion.

Microsoft, one of the two other companies to reach those rarefied levels, took 945 days to go from $2 trillion to $3 trillion while Apple took 1,044 days to make the leap, according to Bespoke Investment Group.

Previously, just 11 U.S. companies since 1925 have reached the top spot in market value on a closing basis, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Fortunes have diverged for past holders of the top position in recent decades. Microsoft reached No. 1 in the late 1990s but then its shares struggled for years during the early 2000s following the dotcom bubble, only to come roaring back in the latter half of the last decade.

Exxon Mobil (NYSE:) became the world’s most valuable company in the 2000s but its shares retreated following a downturn in oil prices.

To some, Cisco (NASDAQ:) is the cautionary tale. The company’s shares peaked at over $80 in March 2000 in the midst of the dotcom boom, during which investors often assigned dizzying valuations to internet-related companies.

Bespoke’s analysts recently contrasted the trajectories of Nvidia and Cisco, whose products were seen as essential in supporting the internet’s infrastructure.

“NVDA’s run has been incredible, but it will need to keep growing from here and stave off competition if its stock is going to keep putting up stellar returns,” Bespoke said in a recent note.

For now, Nvidia’s earnings are supporting its stock price. Revenue more than tripled to $26 billion in the latest quarter, while net income jumped seven-fold to $14.9 billion.

Revenue for the current fiscal year is expected to roughly double to $120 billion, and then rise another 33% in fiscal 2026, to $160 billion, according to LSEG data.

Nvidia’s impressive financial performance and forecasts have led its stock valuation, by some measures, to moderate despite the surge in its share price. For example, Nvidia’s forward price-to-earnings ratio last stood at 43, according to LSEG Datastream. That is higher than the 25 level it stood at to start the year but below levels it reached for much of last year. By contrast, the trades at 21 times earnings.

While Nvidia has been the standout performer, it is not the only stock to benefit from enthusiasm about the profit potential for AI. Shares of other technology companies, including Super Micro Computer (NASDAQ:) and Arm Holdings (NASDAQ:), have also risen sharply this year.

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