Nvidia Market Cap Drops by $1 Trillion, Valuation Returns to Pre-AI Boom Levels

The market capitalization of U.S. semiconductor firm Nvidia has evaporated by more than $1 trillion (approximately 1.5 quadrillion won) over the past two months, though it has recently recovered some of those losses.

Despite this, its valuation remains at levels seen before the artificial intelligence (AI) boom.

Bloomberg reported that based on the closing price of $196.93 on July 7 (local time), Nvidia's 12-month forward price-to-earnings (P/E) ratio stands at 18, the lowest level since early 2019.

Nvidia's valuation is lower than that of the S&P 500 index (approximately 20) and the Nasdaq 100 index (approximately 23).

Nvidia's stock price hit an all-time intraday high of $235.47 on May 14, driven by rising global demand for AI computing and the U.S. government's approval of chip exports to Chinese companies.

Its market cap swelled to $5.7285 trillion.

However, as the correction in semiconductor stocks began in earnest, it shrank to $4.663 trillion on June 26, with $1.0655 trillion evaporating in a month and a half.

Since then, Nvidia's stock price has rebounded slightly, bringing its market cap to approximately $4.94 trillion as of July 7.

The closing price on July 7 is 16% lower than its all-time intraday high.

Nevertheless, its current market cap remains the largest in the world, surpassing Alphabet ($4.3 trillion) and Apple ($4.3 trillion).

Nvidia's market share in server-use graphics processing units (GPUs) also rose to 97% at the end of last year, higher than the previous year.

From the end of 2022 through 2025, Nvidia was considered the hottest stock on Wall Street, with its share price skyrocketing by more than 1,100% due to the explosive demand for AI GPUs.

However, its stock price growth this year has been limited to 5.6%, trailing the gains of the S&P 500 (9.6%) and the Nasdaq 100 (16%).

Analysts suggest that the decline in corporate value is not due to a worsening earnings outlook.

In fact, Wall Street analysts have been raising their earnings forecasts for future quarters.

Nevertheless, the weakness in Nvidia's stock is attributed to it being sidelined by the shift toward memory semiconductor stocks like Micron.

Micron, an Nvidia supplier, has surged 229% this year on the back of soaring high-bandwidth memory (HBM) prices, and shares of AMD and Intel have also doubled or tripled.

In addition, the fact that Nvidia's major clients, such as Alphabet and Amazon, are expanding the development of their own custom AI chips is also considered a factor weighing on the stock.

However, the strength in memory stocks has also appeared to stall in recent days.

Micron, Samsung Electronics, and SK Hynix all plunged on July 2 due to concerns over a slowdown in AI infrastructure demand, entering a correction phase.

Michael Bailey, Director of Research at Fulton Breakefield Broenniman, said, "Market attention has shifted," adding, "Companies like Micron, which had lower expectations, are taking the spotlight."

On the other hand, Randy Hare, Director of Research at Huntington Bank, predicted that the stock would resume its upward trend within a few months, citing solid revenue growth and profitability, and stating, "The current stock price is undervalued."

He added, "Stock prices eventually follow earnings."

According to Bloomberg data, the consensus (average market forecast) for Nvidia's fiscal year 2027 (February 2026 to January 2027) revenue and net profit is $393 billion (approximately 590 trillion won) and $228 billion (approximately 343 trillion won), respectively.

These figures represent a 90% increase in revenue and an 82% increase in net profit compared to the previous year.

In particular, the net profit forecast has risen by 13% over the past three months.

Out of 82 analysts covering the stock, only one has a sell rating, and the average target price is $302, which is more than 50% higher than the current price.

(Photo: AP, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.