Nvidia Loses $1.07 Trillion in Market Value, Sparking Debate Over Whether the Stock Is Undervalued

Nvidia Valuation Falls Back to Pre-AI Boom Levels

Nvidia Corp. has lost more than $1 trillion in market value over the past two months. Its valuation has also fallen back to where it stood before the artificial intelligence investment boom gathered pace.

Bloomberg data show Nvidia traded at 18 times projected earnings for the next 12 months based on its July 7 closing price of $196.93. That was the lowest since early 2019. By comparison, the S&P 500 traded at about 20 times forward earnings and the Nasdaq 100 at about 23 times, leaving Nvidia valued below both indexes.

Nvidia shares climbed to a record intraday high of $235.47 on May 14, helped by expanding global demand for AI computing and expectations that the US government would approve chip exports to Chinese companies. Its market capitalization swelled to $5.7285 trillion. But by June 26, as the correction in semiconductor stocks gathered steam, that had fallen to $4.663 trillion. The drop wiped out $1.0655 trillion in about six weeks.

The stock has since recovered some ground, bringing Nvidia's market value to about $4.94 trillion as of July 7. The closing price remained 16% below its intraday peak. Even so, Nvidia retained the title of the world's most valuable company, and its share of the server graphics processing unit market rose to 97% at the end of last year from a year earlier.

Nvidia became one of Wall Street's defining growth stocks after its shares surged more than 1,100% from late 2022 through 2025 on booming demand for AI GPUs. This year, however, the stock has gained just 5.6%, lagging the S&P 500's 9.6% advance and the Nasdaq 100's 16% rise.

The latest correction is not being driven by weaker earnings expectations. Wall Street analysts have instead raised their profit forecasts for coming quarters. Even so, the stock has underperformed as investor interest recently shifted toward memory-chip names, including high-bandwidth memory, or HBM.

Micron Technology, a supplier to Nvidia, has surged 229% this year on expectations that HBM prices would jump. Advanced Micro Devices Inc. and Intel Corp. have also risen twofold to threefold. Nvidia, by contrast, faces pressure as major customers including Alphabet Inc. and Amazon.com Inc. expand development of their own customized AI chips.

The rally in memory-chip stocks has also cooled recently. Micron, Samsung Electronics Co. and SK Hynix Inc. all tumbled on July 2 on concerns that demand for AI infrastructure may slow, pushing the group into a correction. Michael Bailey, a director at Fulton Breakefield Broenniman Research, said investor attention had shifted from Nvidia to stocks such as Micron, where expectations had been lower.

Others argue Nvidia is undervalued. Randy Hare, a research director at Huntington Bank, said the current share price looks cheap given the company's strong revenue growth and profitability. He expects the stock to resume its climb within a few months, saying share prices ultimately follow earnings.

Bloomberg data show analysts expect Nvidia to post $393 billion in revenue and $228 billion in net income in fiscal 2027. That would represent year-over-year increases of 90% and 82%, respectively. The net income forecast alone has been raised 13% over the past three months. Of the 82 analysts covering the stock, only one has a sell rating. Their average price target is $302, more than 50% above the current share price.

Oh Se-song, Hankyung.com reporter sesung@hankyung.com