EXPLAINED | Microsoft Passed Nvidia. Then Nvidia Took No. 2 Back

Microsoft climbed a spot in the global market-value rankings on Tuesday while its shares were falling. At around noon in New York, it moved into second place because Nvidia was falling faster. By the closing bell, Nvidia had recovered some of its losses and Microsoft had slipped further. The chipmaker was back in second place, despite losing roughly $430 billion in market value over two sessions.

Who finished first, second and third?

Apple finished first at about $5.06 trillion. Nvidia was second at $4.07 trillion after closing at $168.89 a share, down 5.47%. Microsoft was third at $3.96 trillion after closing at $533.16, down 2.20%. Reuters reported that the earlier crossover was the first since June 2025. Both stocks recovered some ground after the bell. At 7:59 p.m. New York time, Nvidia was at $170.49 and Microsoft at $535.08, leaving Nvidia ahead on the same share-count basis.

How did Microsoft move up while its share price fell?

A company’s market capitalisation is its share price multiplied by the number of shares outstanding. Nvidia had about 24.1 billion shares in its last quarterly filing. Microsoft reported about 7.43 billion. A $1 move in Nvidia’s share price therefore changes its market value by about $24 billion, against about $7.4 billion for Microsoft. At the time of the Reuters alert, Microsoft was down 0.4% and Nvidia was down more than 6%. That was enough for Microsoft to edge ahead.

The roughly $430 billion Nvidia lost measures how much investors marked down the value of its shares. The estimate uses the change from Friday’s $186.64 close to Tuesday’s $168.89, multiplied by the share count in its latest quarterly filing.

Why did Nvidia fall harder?

Investors were weighing the risk around co-founder and CEO Jensen Huang on top of a wider sell-off. Nvidia’s board opened an independent inquiry on 8 November into reports that Huang was targeted by a foreign intelligence effort. It said it had no reason at that point to believe company secrets or US national security had been compromised, and expressed confidence in Huang. On Tuesday, its independent directors named former federal prosecutor Joon H. Kim and his law firm to conduct the inquiry.

Nvidia fell on Monday even as the S&P 500 rallied. On Tuesday, US inflation came in higher than economists expected, Treasury yields rose and tech stocks fell more broadly. The Philadelphia semiconductor index fell about 0.4%, a much smaller decline than Nvidia’s. That gives some sense of how much the chipmaker stood out, although the share prices cannot tell us how much of its decline investors attributed to the inquiry.

Why does Microsoft buy from the company it just overtook?

Nvidia designs the processors that do much of the heavy computing for AI. It also sells networking equipment that lets those processors work together. Microsoft puts that equipment in data centres and sells access through Azure, its cloud business. A company building an AI tool can rent time on those machines and pay Microsoft without buying the equipment itself. Microsoft also uses the infrastructure to run its own products. In October, CEO Satya Nadella said Nvidia’s GB300 systems made up most of Microsoft’s GPU deployments and that its first next-generation Vera Rubin GPUs had arrived.

Where do they actually compete?

Microsoft is designing more of the hardware it uses to run AI. Its Maia 200 chip is already handling some Copilot tasks. Microsoft plans to expand the Maia line from 2027 and make it the main system for inference across its products and services. Inference is the computing an AI model does each time it answers a prompt after training. A chip tuned to handle repeated requests with less power can lower Microsoft’s cost of serving them. Maia gives Microsoft another way to add computing power as demand grows. Microsoft continues to deploy Nvidia and AMD chips alongside Maia.

Which company has more riding on the AI bill?

Nvidia depends heavily on data centre sales. That business brought in $89 billion of its $96.2 billion in sales in the quarter ended 26 July. That is about 93% of revenue, including networking equipment as well as processors. If big cloud providers slow their orders, Nvidia has a lot of sales exposed. Microsoft has other sources of income, including office software and gaming, but it has to earn back what it is putting into data centres. It reported $45.2 billion in capital expenditure, including finance leases, in the quarter ended 30 September. Azure revenue grew 48%. The question for Microsoft is how much paid cloud usage and software revenue each new round of investment can generate.

How does Apple fit into this race?

Apple sits at the top of the same stock market table with a different way of making money. It sells devices to consumers and earns fees from services such as subscriptions. In its September quarter, it reported $114.5 billion in sales, up 12% year on year, with a September-quarter record for iPhone sales and an all-time high for services. Nvidia was the first company to cross $5 trillion in October 2025. A year later, Apple has the higher valuation. The rankings track what investors will pay for the businesses as a whole.

Where does this show up in India?

Microsoft opened its fourth Indian cloud region in Hyderabad in August. It named HDFC Bank and Bajaj Finserv among the early customers. The IndiaAI Mission offers another route through local providers. In August, the government told Parliament that 237 projects had been approved for subsidised computing time and that the providers used globally sourced GPUs. For Indian companies building AI tools, the practical questions are which chips they can rent locally, how much it costs to run a job and where their data is processed.

What can Nvidia’s 17 November results settle?

Nvidia reports after the US market closes on 17 November, early on 18 November in India. Its August forecast put revenue at about $108 billion for the quarter ended 25 October and assumed zero data centre computing revenue from China. The new figures will show what Nvidia earned from data centre sales in that quarter. Its outlook will tell investors more about how quickly big customers are still buying and how fast it expects to ship its next generation of chips. The board inquiry is on a separate timetable, with no completion date given in its two statements.