Nvidia Loses $1 Trillion in Market Value Amid Chip Sector Rotation

Nvidia's stock has fallen sharply by about 16% since mid-May, wiping approximately $1 trillion off the company's market capitalization. Despite this significant decline, Wall Street analysts do not see any substantial damage to Nvidia's core business operations. The company's profit forecasts remain strong, and it continues to dominate the GPU server processor market.

According to Bloomberg data, Nvidia's shares currently trade at a forward price-to-earnings ratio of around 18, which is lower than the ratios of the S&P 500 and Nasdaq 100 indices. This indicates a relative decrease in the company's valuation despite its central role in the artificial intelligence (AI) sector. The stock drop is mainly attributed to a rotation of investors within the semiconductor industry.

After a prolonged period where Nvidia was the primary focus of enthusiasm around the AI revolution, investors are now reallocating funds to other chipmakers such as Micron, AMD, and Intel. Micron's stock has notably surged, especially for 2026, driven by strong demand for advanced memory chips used in AI systems. AMD and Intel have also experienced significant gains, while Nvidia's returns since the start of the year have been more moderate compared to some competitors.

Industry experts view Nvidia's stock decline not as a sign of lost market position but rather as a correction following an exceptional and sustained rally. Nvidia remains the dominant player in AI chip technology, but the market is beginning to price in a broader distribution of investments across the sector. The large market value reduction reflects a shift in investor expectations toward diversification rather than an underlying business crisis.