(Reuters) -Nvidia ( NVDA ) became the world's most valuable company on Tuesday, dethroning tech heavyweight Microsoft ( MSFT ), as its chips continue to play a central role in a race to dominate the market for artificial intelligence.

Shares of the chipmaker climbed 3.2% to $135.21, lifting its market capitalization to $3.326 trillion, just days after overtaking iPhone maker Apple ( AAPL ) to become the second most valuable company.

The stock has surged about 173% so far this year, compared with a rise of about 19% in Microsoft ( MSFT ) shares, with demand for its top-of-the-line processors outpacing supply. Tech giants Microsoft ( MSFT ), Meta Platforms and Google-owner Alphabet are racing to build out their AI computing capabilities and dominate the emerging technology.

The surge in shares pushed the stock to a record high, adding over $103 billion to Nvidia's ( NVDA ) market capitalization on Tuesday.

Increasing the appeal for its highly valued stock among individual investors, Nvidia ( NVDA ) recently split its stock ten-for-one, effective June 7.

"A stock split can reduce the price per share, making it more affordable for individual investors to buy. With Nvidia ( NVDA ) doing a 10:1 stock split, retail investors are the real winners here," said Sam North, market analyst at investment platform eToro.

The company's market value expanded from $1 trillion to $2 trillion in just nine months in February, while taking just over three months to hit $3 trillion in June.

(Reporting by Shristi Achar, Medha Singh and Ankika Biswas; Editing by Anil D'Silva and Shounak Dasgupta)