Computer chip manufacturer Nvidia lost its top spot when its shares declined by 3.5 per cent in the US, resulting in a valuation of $3.2 trillion (£2.5 trillion).

Despite a slight dip in Microsoft's shares, the company closed the day's trading at $3.3 trillion (£2.6 trillion).

Nvidia, Microsoft, and Apple are now engaged in a three-way race for supremacy. According to analysts, they are also vying to become the world's first $4 trillion (£3.2 trillion) firm.

Nvidia's recent success can be attributed to its early investment in artificial intelligence (AI) products. The company's stock price surged by 1,000 per cent since October 2022, propelling its valuation to over $3.3 trillion (£2.6 trillion).

While some experts believe Nvidia's trajectory is upward, others question whether it has been overvalued. A critical monitoring factor is whether Nvidia can maintain its AI dominance or if competitors will erode its market share as it aggressively invests in the field.

D.A. Davidson analyst Gil Luria warned that investing in Nvidia was a risky bet, as the company would have difficulty sustaining such performance.

Morningstar financial services firm analyst Brian Colello said that while Nvidia was dominant in AI, successful alternatives could limit the company's upside potential.

While Nvidia briefly held the top spot, some analysts have predicted that competition between the three technology firms will remain fierce.

"We believe that over the next year, the race to a $4 trillion market cap in tech will be front and centre between Nvidia, Apple, and Microsoft," Wedbush Securities said in a note earlier this week.