Nvidia has lost roughly $1 trillion in market value in about two months, bringing its valuation down to the lowest level seen since the rapid rise of artificial intelligence. Although the company’s graphics processing units (GPUs) still dominate AI data-center workloads, investor interest has shifted toward other semiconductor segments.
Key numbers and comparisons
- Nvidia shares have fallen 13% since the record high reached on May 14.
- According to Bloomberg, the stock currently trades at about 18 times expected next-12-month earnings (forward P/E), a level not seen since early 2019.
- That valuation is below the S&P 500 average (which trades above a 20x P/E) and also behind the technology-focused Nasdaq 100, which trades near a roughly 23x multiple.
What’s driving the decline?
The drop does not stem from weakening growth prospects: analysts continue to raise earnings forecasts for Nvidia for upcoming quarters. The main driver is a reallocation of AI-related investment toward other types of chips and suppliers, notably memory and storage-chip manufacturers such as Micron Technology.
Competitors and market trends
- Among Nvidia’s key competitors, Advanced Micro Devices (AMD) and Intel have seen their share prices double or triple this year.
- The Philadelphia Semiconductor Index has jumped 74%, marking its best annual performance since 2003.
Performance 2022–2026
Nvidia’s stock surged more than 1,100% from the end of 2022 through the end of 2025, but that momentum has slowed: in 2026 the share rose only 5.6%, lagging the S&P 500’s 9.6% and the Nasdaq 100’s 16% increases for the same period.
Position within the S&P 500 and relative valuation
Analysts expect Nvidia to deliver one of the fastest revenue growth rates in the S&P 500 this year (ranked fourth), yet the stock is currently priced cheaper than roughly half of the companies in the index — including less-obviously comparable firms such as Hershey and Dominion Energy.
Conclusion
A rotation within the semiconductor sector and changing capital allocation toward memory and storage suppliers explain much of Nvidia’s valuation decline, even as the company’s fundamental outlook has not deteriorated. Short-term market flows have reduced the premium once enjoyed by AI-focused leaders.
This article is not investment advice.
