Nvidia loses $1tr in market cap, valuation falls to pre-AI boom levels

Nvidia's market cap has shed more than $1 trillion in roughly two months, though the US chipmaker has since clawed back some of those losses. Even so, its valuation remains at levels last seen before the AI boom.

Bloomberg reported Wednesday that Nvidia's 12-month forward price-to-earnings ratio stood at 18 times, based on Tuesday's closing price of $196.93 — the lowest since early 2019.

That valuation trails both the S&P 500, at roughly 20 times, and the Nasdaq 100, at roughly 23 times.

Nvidia's share price hit an intraday all-time high of $235.47 on May 14, driven by surging global demand for AI computing and the US government's approval of chip exports to Chinese companies. Its market cap swelled to $5.73 trillion.

But the market cap shrank to $4.66 trillion on June 26, when a broader semiconductor selloff intensified — erasing $1.07 trillion in roughly a month and a half. Nvidia shares have since staged a modest recovery, bringing the market cap back to around $4.94 trillion as of Tuesday.

Tuesday's closing price was still 16 percent below the intraday record. Even so, Nvidia's market cap remains the largest in the world, ahead of Alphabet ($4.3 trillion) and Apple ($4.3 trillion).

Nvidia's share of the server GPU market also climbed to 97 percent at the end of last year, up from the prior year.

From late 2022 through 2025, Nvidia's share price surged more than 1,100 percent on the back of explosive demand for AI GPUs, making it Wall Street's hottest stock. This year, however, the shares have gained just 5.6 percent, lagging the S&P 500's 9.6 percent and the Nasdaq 100's 16 percent. Some analysts say the valuation decline does not reflect a deteriorating earnings outlook.

Wall Street analysts have in fact been raising their forward earnings estimates for coming quarters. The underperformance, some analysts say, reflects Nvidia being left out of a rotation into memory chip stocks such as Micron.

Micron, an Nvidia supplier, has surged 229 percent this year on the back of soaring HBM prices, while AMD and Intel shares have roughly doubled or tripled. Adding to the pressure, key Nvidia customers including Alphabet and Amazon have been expanding development of custom in-house AI chips.

The rally in memory chip stocks has itself shown signs of stalling in recent days, however. Micron, Samsung Electronics and SK hynix all tumbled on Thursday on concerns about slowing AI infrastructure demand, entering correction territory.

Michael Bailey, director of research at Fulton Breakefield Broenniman, said "the market's attention has shifted," adding that "companies like Micron, where expectations were low, are taking the spotlight."

Randy Hare, director of research at Huntington Bank, took the opposite view, arguing that strong sales growth and profitability mean the stock is undervalued at current levels and should resume its climb within a few months. "Share prices ultimately follow earnings," he said.

According to Bloomberg data, the consensus estimates for Nvidia's fiscal year 2027 — covering February 2026 through January 2027 — put sales at $393 billion and net profit at $228 billion, representing year-on-year increases of 90 percent and 82 percent, respectively. The net profit estimate alone has risen 13 percent over the past three months.

Of the 82 analysts covering the stock, only one carries a sell rating, and the average price target stands at $302 — more than 50 percent above the current level.