Nvidia shares rose 3.6% on Tuesday, boosting the company's market capitalization to $3.34 trillion and surpassing Microsoft's market capitalization of $3.32 trillion. Nvidia's stock performance was the best in the S&P 500, having more than tripled in value over the past 12 months.

Nvidia's computer chips and software are key to training AI algorithms such as OpenAI's ChatGPT. In May, Nvidia posted an impressive $14 billion profit thanks to strong chip sales, and its major customers include Apple, Meta and Microsoft.

Mizuho Securities estimates that Nvidia controls 70 to 95% of the market for AI chips used in training and deploying models such as GPT OpenAI. Nvidia's strong market position is underscored by its 78% gross margin, an extremely high number for a hardware company involved in manufacturing and supplying physical products. In contrast, rival chipmakers Intel and Advanced Micro Devices had gross margins of 41% and 47%, respectively, in the latest quarter.