Nvidia Market Cap Evaporates Over $1 Trillion, Valuation Falls Back to Pre-AI Boom Levels
Miles Bennett
Nvidia has fallen 16% from its May high, erasing over $1 trillion in market cap; its forward P/E sits at roughly 18× — below the S&P 500 and back to pre-AI-boom territory. Yet Wall Street keeps raising earnings estimates, and the real driver is a sector-wide rotation out of Nvidia into the broader semiconductor chain.
How far has it fallen — and how cheap is it now?
Nvidia is down 16% from its May 14 all-time high, shedding more than $1 trillion in market cap.
The stock now trades at roughly 18× forward earnings — its lowest since early 2019. This means → the valuation has reset to where it sat before the AI narrative took off.
For context: the S&P 500 trades at about 20× and the Nasdaq 100 at about 23×. In plain terms = Wall Street's most celebrated AI leader is now cheaper than the index average — and even cheaper than candy maker Hershey and utility Dominion Energy.
Is the business deteriorating?
No. Analysts keep lifting estimates; profit forecasts have been revised up 13% over the past three months.
Bloomberg data projects Nvidia's FY2027 profit at $228 billion and revenue at $393 billion — year-on-year growth of roughly 90% and 82%, respectively.
This means → the sell-off is not about weaker results. Fundamentals and share price are moving in opposite directions — the issue is capital reallocation, not business trouble.
Where is the money going?
Capital is rotating out of Nvidia into semiconductors that previously carried minimal expectations. Research director Michael Bailey noted: "Sentiment has shifted. Names with very low prior expectations — like Micron — are grabbing the spotlight."
Micron Technology is up 229% year-to-date in 2026, leading the Philadelphia Semiconductor Index; the index itself is up 74%, on track for its best year since 2003.
Nvidia, by contrast, is up just 5.6% YTD — trailing the S&P 500's 9.6% and Nasdaq 100's 16%. It ranks third from the bottom in the SOX. This reflects a broadening of the AI investment theme from "buy Nvidia alone" to memory, storage, and the wider chip supply chain.
Has Nvidia's market position weakened?
No. Despite AMD and Intel doubling or tripling this year and Google and Amazon accelerating custom chip programs, Nvidia's server-GPU market share actually rose from 95% at end-2024 to 97% at end-2025.
In plain terms = rivals are capturing expectations and fund flows, not Nvidia's actual orders.
Of the 82 analysts tracked by Bloomberg, only 3 rate hold and 1 rates sell. The average target price is $302 — implying over 50% upside, the highest implied gain among the "Magnificent Seven."
What comes next?
The core tension: fundamentals have never been stronger, but AI-driven rotation pressure is unlikely to fade quickly.
CIO Eric Clark's read: "The stock ran hard and fast — a very crowded trade. The market wants to position elsewhere, and Nvidia became a source of funds."
This means → whether the valuation re-rates once earnings deliver will be the key test at the next reporting season.
Content is for reference only, not financial advice.