Nvidia’s AI-era valuation premium fades after $1T decline

Nvidia’s shares have fallen to their lowest valuation since before the AI boom after the company lost nearly $1 trillion in market value in under two months, according to Bloomberg.

Despite the decline, analysts say the company’s business remains strong.

Nvidia’s shares soared over 1,100% between late 2022 and 2024 as demand for its AI GPUs skyrocketed. Yet the momentum has cooled: the stock has fallen 16% since reaching a record high on May 14, as investors shift money into other semiconductor companies, especially memory chip makers.

After consistently outperforming the broader market, Nvidia has gained just 5.6% this year, trailing the S&P 500’s 9.6% gain and the Nasdaq 100’s 16% rise.

The decline does not reflect weaker financial performance. Analysts have continued raising their profit forecasts as demand for Nvidia’s AI chips remains strong. The company is no longer the only beneficiary. Investors are increasingly backing alternative chipmakers and memory suppliers, helping lift the Philadelphia Semiconductor Index 74% this year. 

Rivals such as AMD, Intel and Micron have gained investor attention, with the latter’s stock soaring 229% after a 239% gain last year.

However, Nvidia still controls about 97% of the server GPU market, highlighting its leadership in AI data centers.

Experts believe Nvidia’s long-term outlook remains positive. The company expects strong revenue and profit growth through fiscal 2027, supported by continued AI infrastructure spending.

Most Wall Street analysts remain bullish on Nvidia. Of the 82 analysts covering the stock, only four do not recommend buying it, with the average price target suggesting more than 50% upside over the next year.