In a tight race, Nvidia is now set to become the world's second-most-valuable company, and investors can't seem to get enough of the semiconductor maker whose chips power popular artificial intelligence tools such as ChatGPT.

The company's valuation has jumped from $1 trillion to more than $2 trillion in just nine months, passing Amazon, Google-parent Alphabet, and Saudi Aramco on its way.

Reuters revealed Nvidia's market capitalization currently hovers around $2.38 trillion, falling behind Apple by only about $230 billion and Microsoft by roughly $645 billion.

Proving instrumental to Wall Street's record levels this year, the unstoppable rise in shares of Nvidia controls 80% of the high-end AI chop market, giving the company a more than 5% weightage on the benchmark S&P 500 index.

Outperforming shares of what's known as the Magnificent 7, Nvidia is up 95%, and Meta Platforms is up 46.6$ this year, highlighting investors' growing need for all things AI.

"Nvidia's rally reflects the incredibly strong fundamentals underlying its current business model," said Richard Meckler, partner at Cherry Lane Investments, a family investment office located in New Vernon, New Jersey.

Meckler also revealed that"It is also finding strong speculative support as a favorite among long option buyers who have seen almost a straight upward climb throughout 2024."

Apple Faces Steep Competition

Apple is currently struggling from slowing iPhone sales and has lost its position as the most valuable US company to Microsoft for the first time since 2021 in January.

Most recently, Nvidia replaced Tesla as Wall Street's most-traded stock by value.

Despite the stock's strong grip, its 12-month forward price-to-earnings ratio of 36.6 is lower than where it was a year ago.

"Nvidia is in fact the cheapest of the 'AI narrative' stocks out there," said David Wagner, portfolio manager at Aptus Capital Advisors.

"We continue to believe that in five years or 10 years, we will all be talking about an industry that is far larger than the numbers being bandied about today."

However, signs are showing Nvidia stock is nearing a peak. Over the next 12 months, Wall Street analysts' media target price indicates Nvidia would trade at $850 per share, below the last closing price of $296, according to LSEG data.

"Of course, it is very difficult for any mega-cap stock's price to continue to grow at this pace as the law of large numbers eventually comes into play. But the stock price could remain at these levels if the company can continue to meet or exceed the high expectations of analysts.", Meckler disclosed.